The National Exhibition Centre (NEC) case concerned the VAT treatment of booking fees on ticket sales. Following the decision of the First Tier Tribunal (FTT) in the taxpayer's favour, HMRC appealed to the Upper Tribunal (UT) and the UT's decision has now been released.

Background

The NEC acted as a disclosed agent for promoters and charged a booking fee on its ticket sales. They argued that the booking fees should have been exempt from VAT, as they represented a payment handling charge for processing customers' credit/debit card payments. HMRC disagreed, arguing that NEC made taxable supplies by processing the ticket purchase. At the FTT the case was decided in favour of the NEC and HMRC appealed.

The UT decision

The UT appeal concerned two issues: the first issue is whether the booking fees are consideration for supplies of card processing services (i.e. the 'supply issue'), and the second issue is whether such services are exempt from VAT (i.e. the 'exemption issue'). The UT's decision addresses only the supply issue, finding that the fees were in exchange for the facility of booking by credit/debit card rather than any other services. Accordingly, the UT dismissed HMRC's appeal on this point.

The UT agreed to both parties' submission that the 'exemption issue' should be referred to the CJEU for a preliminary ruling. In brief, the question referred will be whether the supply is as an exempt payment handling service or a taxable administration charge. This is similar to the referral to the CJEU already being made following the Bookit case.

What next?

Although it may be some time before the CJEU decision, the UT decision provides an opportunity to taxpayers with similar issues. While the decision of the FTT was only binding on the parties involved, the decision of the UT will allow other taxpayers to apply the decision (subject to the decision of the CJEU). If the decision of the FTT is upheld by the CJEU, there will be scope for booking fees that were previously treated as taxable to be treated as VAT exempt and businesses who have accounted for VAT on such services should consider making a protective claim.

If you would like to discuss the possibility of making such a VAT claim, please contact a member of the VAT team.

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