Timeshare options

MacDonald Resorts was registered for VAT in both the UK and Spain. It sold timeshares in properties in both countries. The company set up a scheme known as the options scheme whereby customers acquired points which could be redeemed for various benefits.

HMRC said the sale of points was in the UK a taxable supply of benefits resulting from membership of a club.

The matter was appealed to the Court of Session which requested a preliminary ruling from the European Court of Justice.

The court ruled that supplies of services offered under the scheme became chargeable when the customer converted the rights he acquired through the scheme into a service.

Where those rights comprised hotel accommodation or the temporary use of a property the supply was one of services connected with immovable property taxable in the country where the hotel or property...