Tesco Plc v Commissioners for Customs and Excise Rev 1

Tesco Plc v Commissioners for Customs and Excise Rev 1

Vouchers issued under Tesco's Clubcard scheme and related third party schemes are not 'granted for a consideration' within the meaning of paragraph 5 of Schedule 6 to the Value Added Tax Act 1994 as interpreted in accordance with Community law. The price paid by customers for premium goods is the same for Clubcard and non-Clubcard members, and there is no direct link between any part of the price and the issue of vouchers. The economic and legal analysis, as required by Community law and relevant case law, demonstrates that the supply of vouchers is not for consideration, and thus Tesco's appeal fails.

Parties
Appellant: Tesco PLC; Respondents: The Commissioners for Customs and Excise
Jurisdiction
England and Wales
Judgment Date
14 October 2003
Procedural Posture
Civil Appeal / Court of Appeal Judgment on Appeal From High Court, Chancery Division
Outcome
Appeal dismissed
Legal Topics
Value Added Tax (vat), Vouchers and Consideration, Community Law Interpretation, Double Taxation, Promotional Schemes
Tax Law European Union Law Value Added Tax (vat) Vouchers and Consideration Community Law Interpretation Double Taxation Promotional Schemes

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Parties

Tesco PLC

Appellant

The Commissioners for Customs and Excise

Respondents

Procedural Posture

Civil Appeal / Court of Appeal Judgment on Appeal From High Court, Chancery Division

Legal Issues

  1. 1 Whether vouchers issued under Tesco's Clubcard scheme and related third party schemes are 'granted for a consideration' within the meaning of paragraph 5 of Schedule 6 to the Value Added Tax Act 1994, as interpreted in accordance with Community law.
  2. 2 Whether the right to receive goods up to the face value of a Clubcard voucher is granted for a consideration, such that VAT liability is affected.

Ratio Decidendi

Vouchers issued under Tesco's Clubcard scheme and related third party schemes are not 'granted for a consideration' within the meaning of paragraph 5 of Schedule 6 to the Value Added Tax Act 1994 as interpreted in accordance with Community law. The price paid by customers for premium goods is the same for Clubcard and non-Clubcard members, and there is no direct link between any part of the price and the issue of vouchers. The economic and legal analysis, as required by Community law and relevant case law, demonstrates that the supply of vouchers is not for consideration, and thus Tesco's appeal fails.

Court Disposition

Appeal dismissed

Orders

  • Tesco's appeal is dismissed.
  • The Commissioners' cross-appeal is allowed.