Leisure Pass Group Ltd v HM Revenue & Customs

A voucher is a face-value voucher only where it represents a right to obtain goods or services up to a stated or recorded monetary amount. The amount must operate as a monetary ceiling: once it is exhausted, the voucher cannot be used further. A pass permitting admission to selected attractions for a specified period is not such a voucher merely because the admission prices can be added together. Where a single package combines VAT-exempt and VAT-liable admissions, the package may be treated as one supply, with the exemption unavailable to its component parts. Input tax credit may be available for VAT charged on supplies made to the package provider.

Leisure Pass Group Limited sold London Passes giving holders admission to numerous attractions for periods of one to six days. The Pass price varied according to duration and customer category. The attractions charged Leisure Pass Group a negotiated fee for each admission.

HMRC decided that sales of the Passes attracted VAT and that the face-value voucher provisions in Schedule 10A to VATA 1994 did not apply. The VAT and Duties Tribunal dismissed Leisure Pass Group’s appeal on the basis that the Pass did not represent services to the value of an amount stated or recorded in it. Leisure Pass Group appealed to the High Court.

1. Appeal dismissed. The London Pass was not a face-value voucher within paragraph 1(1) of Schedule 10A to VATA 1994.
2. Paragraph 1(1) required two elements: the Pass had to represent a right to services to the value of an amount, and that amount had to be stated on or recorded in the Pass. The second element was assumed in the appellant’s favour, but the first was not satisfied.
3. The word “to” meant “up to”. The Schedule applied to vouchers subject to a monetary ceiling, such as a book token, which was exhausted when the stated value had been spent. The London Pass was limited by duration and, theoretically, by the number of attractions visited. The aggregate of attraction gate prices did not determine whether the Pass remained usable and was therefore irrelevant to its operation.
4. The Pass represented a single right to visit attractions selected by the holder, rather than separate rights to admission each having its own monetary value. Treating it as 55 individual admission vouchers would not alter that conclusion.
5. The VAT consequences of packaging rights to VAT-exempt and VAT-liable attractions in one supply were attributable to the appellant’s choice to sell a single package. The court also considered that VAT charged by attractions on supplies to the appellant should generally give rise to input tax credit, so that the result did not necessarily produce double taxation. That observation was expressly tentative and was not necessary to the decision.

1. VAT and Duties Tribunal: appeal against HMRC’s decision dismissed on 20 September 2007.
2. High Court (Chancery Division): appeal dismissed by Sir Andrew Park on 11 September 2008.