Something extra

Total UK Ltd operated a customer loyalty scheme TOPS. Customers became registered cardholders and collected points for every litre of fuel purchased which they subsequently could exchange for gift vouchers which could be used in a variety of high street stores.

The taxpayer company said that the amounts on which it was due to pay output tax should be reduced by the amounts equal to the cost it incurred in purchasing the vouchers.

The VAT tribunal disagreed but the High Court later overturned that decision.

The Court of Appeal ruled that there was no suggestion that the vouchers constituted money off or cash back in respect of fuel purchases.

The scheme documentation focused on the fact that customers got something extra through participating in the scheme.

Thus the transfer of a voucher to the customer did not reduce the amount paid in respect of fuel. The point...