Expectation that HMRC would follow its own guidance

Vacation Rentals acted as a booking agent collecting payments from holidaymakers on behalf of property owners. When payment was made by credit or debit card it charged an additional fee for handling services.

In Bookit v CRC [2006] STC 1367 the Court of Appeal said these fees were exempt services. After that HMRC issued Business Brief 8/06 on which Vacation Rentals relied to treat its supplies as exempt.

HMRC refused to apply the terms of the brief to these supplies. It agreed the guidance could give rise to a legitimate expectation but said for the exemption to apply the agent had to obtain the authorisation code from the card issuer and transmit it to the merchant acquirer with the card details and security information. The taxpayer did not satisfy this condition because it transmitted the card information and security information to its merchant acquirer and received the authorisation...