The Impact of Non-Monetary Credits in Refer-a-Friend Schemes on VAT Treatment

• Simple Energy Limited v HMRC case highlights issues with refer-a-friend schemes
• Bulb Energy operated a refer-a-friend scheme where existing customers received a credit for referring new customers
• Bulb treated the referrals as a contingency, resulting in a discount from the value of energy supply
• HMRC argued that the scheme was a service provided by the referrer and VAT should be accounted for before the credit is applied
• The FTT found in favor of HMRC and the appeal was dismissed
• Non-monetary consideration can have value and should be accounted for in VAT calculations
• This decision raises questions for sectors using refer-a-friend schemes and how discounts and credits are accounted for in VAT.

Source: saffery.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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