VAT is a simple tax! Yes it is!

Les Howard
VAT Consultant
Share this content

This is the conclusion of the Tribunal in the Tesco Clubcard case. Although it required four days of Tribunal time, plus multiple post-hearing submissions, the Chairman conclude that the VAT analysis is ‘both simple and straightforward.’

Para 74 of the decision reads;

I have laboured, I regret for too long, to reconcile the competing requirements that I must pay heed to the contractual position, to the economic reality of the facts as I find them to be, and to prior authority; and I have been puzzled by the extent of that authority. The arguments in this appeal occupied four days of tribunal time, and resulted in several rounds of submissions and responses after the hearing had concluded. Those factors have caused me to wonder, both during the hearing and thereafter, whether there is some complication to loyalty schemes such as the Clubcard scheme which has escaped my notice since, try as I might to find that complication, I have failed. Rather, it seems to me that the VAT analysis is in truth both simple and straightforward once one puts aside some misconceptions and understands how the scheme works.

A taxable person accounts for output tax, at the appropriate rate, on supplies it makes. In turn, it can reclaim input tax on taxable supplies received by it. What’s so complicated about that!

So why did HMRC pursue the decision, since the facts were broadly similar to several previous cases?

Was it the fact that there was £166m of input tax at stake?

Oh, you cynic!

The whole decision is here:


About Les Howard


Hi, I am a VAT Consultant, working mainly with charities. I am based in Cambridgeshire

I have over 20 years experience in VAT, and am currently also a part-time member of the Tax Tribunals.


Please login or register to join the discussion.

There are currently no replies, be the first to post a reply.