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Tesco Freetime: rewards, Redrow and input VAT recovery

In a decision which is now final, the Upper Tribunal (UT) has allowed Tesco Freetime to recover input VAT paid to third party providers of rewards to members of the Clubcard loyalty scheme, rejecting HMRC’s arguments that the payments made by Tesco Freetime represented third party consideration. The UT emphasised that economic reality was not the starting point for the analysis of whether there was a supply to the taxpayer, but rather an (important) overlay to the contractual position, and endorsed the Redrow approach of considering things from the position of the person claiming the input tax deduction.

Sarah Bond, Counsel, and Will Robinson, Associate, (both London Tax) were members of the taxpayers’ advisory team and explore the UT’s decision in more detail in the briefing at the link below.

Tesco Freetime [4318]
(PDF - 649.8 KB)

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