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Findmypast Ltd v CRC, Upper Tribunal (Tax and Chancery Chamber), 21 January 2016
Nature of credits bought by a website customer
The taxpayer provided online access to genealogy and ancestry information. Customers could search the historical records on the website free, but had to buy PayAsYouGo (PAYG) credits or a subscription, or use a voucher to view them. Under PAYG, a customer paid a lump sum for which he received credits that expired after a fixed time. Unused credits would be revived if the customer bought more credits within two years, otherwise they were lost.
The taxpayer claimed a repayment of VAT on the basis no VAT liability arose when credits had not been used because there had been no taxable supply. The claim related to the period from September 2008 to May 2012. After that date, the law was changed to make VAT due on single-purpose face-value vouchers at the time of their issue.
HMRC refused the claim, saying that, in return for the purchase of the credits, customers received a package including the facility to search for genealogical information and the ability to download them. The two were interdependent.
The First-tier Tribunal agreed with HMRC. The taxpayer appealed.
Lord Glennie in the Upper Tribunal agreed with the taxpayer that the use of the search engine did not form part of a package paid for by the customer when he purchased PAYG credits. The credits gave him the right to access documents, as long as he did so within the specified time.
The judge said the service was provided when the records were accessed. There was no link between the payment and the use of the search facility; the supply of credits gave the customer access to records.
The second issue was whether the credit was a face-value voucher within VATA 1994, Sch 10A para 1(1). The judge said the credit balance shown on the website represented the right to access documents up to a particular amount. For the customer, that was represented by credits which he had bought with money.
The fact that it was recorded on the website in terms of credits rather than by reference to money value was not relevant. The customer knew he had a certain number of credits. These satisfied the conditions in para 1(1) in that they were, in effect, vouchers in electronic form that gave the customer the right to receive goods or services to the value of the amount recorded.
The taxpayer’s appeal was allowed.
