Wiltonpark Ltd & Ors v Revenue & Customs

For VAT purposes, the nature of a supply is determined by its economic reality from the customer’s standpoint. A payment for voucher redemption may cover more than the mechanics of receiving or dealing with vouchers. Where the recipient trades from premises and facilities supplied by the provider, those facilities may form part of the supply made in return for the redemption charge if they are necessary to exploit the relevant market. The supply must then be assessed as a whole. It may fall outside the exemption for dealings with money or securities for money. Appellate courts should be slow to interfere with a specialist tribunal’s evaluative classification of a supply based on primary facts.

The appellants operated London table- and lap-dancing clubs. Self-employed dancers received cash or vouchers from customers. The appellants sold the vouchers, redeemed them at the end of the evening, and retained 20 per cent of their face value as commission.

The First-tier Tribunal held that the commission was consideration for a single taxable supply and dismissed claims and assessments concerning VAT. The Upper Tribunal upheld the result in FTC/74/2014, treating the club’s facilities, as well as the voucher scheme and redemption service, as part of the supply made for the commission. The central issue in the Court of Appeal was whether those facilities could properly be attributed to the commission rather than solely to the separate entrance fee.

1. Appeal dismissed. The Upper Tribunal’s conclusion was a legitimate evaluative interpretation of the services supplied for the 20 per cent commission and was open on the evidence.
2. The relevant question was whether provision of the club’s premises and facilities formed part of the consideration for the commission payable on voucher redemption. The dancers traded at the appellants’ clubs, not from their own premises. They needed both the voucher scheme and the club’s environment and facilities to earn money from customers who paid by voucher. The entrance fee enabled use of the club for cash-customer business, but use of the facilities for non-cash business would have no economic purpose without the voucher scheme.
3. The distinction from Kingfisher plc v Customs and Excise Commissioners was material. In that case the retailer traded from its own premises, whereas here the dancers depended on the appellants’ premises and facilities. The commission therefore covered services going substantially beyond receipt or dealing with a security for money under Item 1 of Group 5 of Schedule 9 to the Value Added Tax Act 1994. It was taxable at the standard rate.
4. The 20 per cent rate supported the conclusion that the payment covered more than voucher inclusion and encashment, particularly since the appellants bore little credit risk. Redemption by waiters or use of vouchers to discharge debts between dancers were incidental consequences and did not alter the services supplied to the typical dancer.
5. The Court did not need to decide the alternative analysis that the entrance fee and commission together paid for one composite supply. The appeal was dismissed.

• Court of Appeal (Civil Division): Appeal dismissed on 15 December 2016. The court upheld the Upper Tribunal’s conclusion that the 20 per cent commission was consideration for a taxable supply extending beyond voucher redemption.
• Upper Tribunal (Tax and Chancery Chamber): The decision of Mrs Justice Rose in FTC/74/2014 upheld the First-tier Tribunal’s dismissal of the appellants’ VAT repayment claims and appeals against assessments.
• First-tier Tribunal (Tax Chamber): Appeals against repayment refusals and VAT assessments were dismissed.