The issue of bidding credits is a supply in its own right

Marcandi Ltd sold technology products through an online platform. Customers had to buy credits from Marcandi to make bids in online auctions but these credits could not be used to buy goods or be converted into cash.

HMRC considered the credits were consideration for supplies of the right to take part in the auctions. The taxpayer said the issue of credits was a preliminary transaction and therefore VAT was due only on the supply of the goods bought.

The First-tier Tribunal referred the matter to the Court of Justice of the EU.

This ruled that the issue of credits was a separate supply of services for consideration and their value did not form part of the taxable amount of the supply of goods bought in the online auctions.

Issue: 4662 / Categories: Tax cases