Simple Energy Ltd v Revenue And Customs (supplier’s "refer a friend" scheme) [2023] UKFTT 976 (TC) (17 November 2023)

Simple Energy Ltd v Revenue And Customs (supplier’s "refer a friend" scheme) [2023] UKFTT 976 (TC) (17 November 2023)

Referral credits given to referrers under Bulb's scheme constitute non-monetary consideration for VAT purposes because referrers perform an activity (introducing Bulb and sharing referral links in a prescribed manner) that is contractually linked to the reward, meeting the legal threshold for consideration. The subjective value placed on the referral activity by Bulb and its customers establishes the necessary reciprocity and direct link required by VAT law. The credits are not mere price discounts or rebates, but consideration for a service provided by the referrer.

Citation
[2023] UKFTT 976
Parties
Applicant: Bulb; Respondent: HMRC
Jurisdiction
United Kingdom
Judgment Date
17 November 2023
Procedural Posture
VAT Appeal / Final Judgment
Outcome
Appeal dismissed; referral credits treated as non-monetary consideration for VAT purposes.
Legal Topics
Value Added Tax, Non Monetary Consideration, Discounts and Rebates, Referral Schemes, Reciprocity in Contracts
Tax Law Contract Law Value Added Tax Non Monetary Consideration Discounts and Rebates Referral Schemes Reciprocity in Contracts

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Parties

Bulb

Applicant

HMRC

Respondent

Procedural Posture

VAT Appeal / Final Judgment

Legal Issues

  1. 1 Whether referral credits in Bulb's scheme constitute non-monetary consideration for VAT purposes or are price discounts/rebates
  2. 2 Whether activities of referrers meet the legal threshold for consideration under VAT law

Ratio Decidendi

Referral credits given to referrers under Bulb's scheme constitute non-monetary consideration for VAT purposes because referrers perform an activity (introducing Bulb and sharing referral links in a prescribed manner) that is contractually linked to the reward, meeting the legal threshold for consideration. The subjective value placed on the referral activity by Bulb and its customers establishes the necessary reciprocity and direct link required by VAT law. The credits are not mere price discounts or rebates, but consideration for a service provided by the referrer.

Court Disposition

Appeal dismissed; referral credits treated as non-monetary consideration for VAT purposes.

Orders

  • Bulb must account for VAT on referral credits given to referrers as consideration for services.
  • VAT is not reduced by referral credits; credits are not treated as price discounts or rebates.