- The recent FTT case of Simple Energy, involving Bulb Energy’s ‘refer-a-friend’ credit, ruled that the credit was not a discount for VAT purposes, but part of the taxable value of Bulb’s supply of domestic energy.
- This suggests HMRC may be targeting and assessing VAT on similar credits treated as discounts.
- The case involved a dispute over the VAT treatment of a credit given to existing customers.
- HMRC argued that the credit was part payment for a service provided by the customer, and the FTT ruled in favor of HMRC.
- This decision could have implications for businesses using similar customer reward schemes, as they may need to review their VAT position.
- Additionally, the case highlights the wider VAT implications of non-monetary consideration in barter transactions, which may require complex valuation exercises to calculate the tax payable.
Source RSM
