Virgin Atlantic Airways Ltd – FTT: Loyalty Scheme VAT Appeal Stayed Pending Avios Decision
- The First-tier Tribunal (FTT) granted HMRC’s application to stay Virgin Atlantic’s VAT appeals pending the final outcome of the Avios litigation. The Tribunal concluded that both cases involve substantially similar issues concerning the VAT treatment of payments received from commercial partners participating in airline loyalty schemes, making the Avios decision likely to provide significant guidance for resolving the Virgin dispute.
- Virgin challenges HMRC’s assessment of approximately £23.5 million of VAT, arguing that loyalty points issued under its scheme should be treated as multi-purpose vouchers (for periods from 1 January 2019) or as preliminary transactions rather than consideration for taxable marketing and loyalty services. HMRC maintains that payments received from earn partners constitute consideration for standard-rated supplies of marketing and loyalty programme services.
- Although Virgin argued that factual differences exist between its scheme and the Avios programme, the FTT found sufficient overlap in the legal and commercial issues to justify a stay. The Tribunal considered that any delay caused by waiting for the Avios outcome was outweighed by the benefits of consistency and judicial efficiency. As a result, Virgin’s appeals were consolidated and stayed until 60 days after the Avios proceedings are finally determined.
Source KPMG
- Virgin Atlantic appealed HMRC’s VAT assessments on its loyalty points scheme, especially payments involving “earn partners.”
- HMRC asked for Virgin’s case to be stayed behind the Avios Group appeal, which raises similar VAT issues.
- The First-tier Tribunal found very strong similarity and overlapping legal questions between the two cases.
- It decided the Avios decision would materially help resolve Virgin’s appeal.
- The FTT granted HMRC’s request for a stay, despite possible delay costs.
Source: taxscape.deloitte.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.
Latest Posts in "United Kingdom"
- Dental Aligners Are Not VAT-Exempt Dental Prostheses, UK Tribunal Confirms
- Amazon updates Fulfilled by Merchant (FBM) requirements — Germany & UK 2026
- UK Court Expands VAT Exemption Potential for Private Higher Education Providers
- UK VAT on marketplace sales: HBS Enterprises Ltd v HMRC
- Sale of Intellectual Property Constituted a Separate Economic Activity for VAT Purposes
