City sightseeing passes qualified as a multi-purpose voucher

The taxpayer historically issued city sightseeing passes but changed the commercial arrangement of trading after the introduction of new VAT legislation for face vouchers from 1 January 2019; the law was changed to comply with amendments to the EU’s Principal VAT Directive (PVD). From that date customers paid for a ‘credits package’ which gave them the right of admission for particular attractions and events such as museums and transport facilities. One credit was worth £1 with the London Pass (LP) and one credit equated to a single entry to an attraction with a London Explorer Pass (LEP).

The taxpayer claimed that the credit passes qualified as multi-purpose vouchers (MPVs) and the proceeds were outside the scope of VAT until they were used because they could be used on both standard-rated and zero-rated/exempt supplies. HMRC argued that this would give the taxpayer a VAT windfall on unused credits...