Leisure Pass Group Ltd v Revenue and Customs Commissioners [2008] EWCH 2158 (Ch), [2008] All ER (D) 55 (Sep)
Chancery Division, Sir Andrew Park, 11 September 2008
The definition of “face-value” voucher in para 1(1) of Sch 10A to the Value Added Tax Act 1994 (VATA 1994) includes only vouchers in the case of which the holder could run out of the money represented by them.
Kevin Prosser QC and Andrew Hitchmough (instructed by KPMG LLP) for the taxpayer. Philippa Whipple (instructed by the solicitor for Revenue and Customs) for the Revenue.
The taxpayer sold a product which it called the “London Pass”(the pass), which was principally aimed at the tourist market.
The pass entitled the holder, during the period of its validity (anywhere between one and six days), to visit without payment any of about 55 London attractions comprising places of interest and leisure activities (the attractions). A particular attraction could only be visited once during the validity of the pass.
The taxpayer contracted with the operator of each of the attractions to allow the passholder entry without further payment. For each entry with a pass, the taxpayer paid a fee to the attraction which was between 20% and 40% below the gate price.
An issue arose as to whether or not the taxpayer was liable to account to the Revenue for VAT on the receipts which it obtained on sales of the passes, or whether no VAT was payable at that stage by virtue of Sch 10A to VATA 1994. Paragraph 1(1) of Sch 10A provided: “In this Schedule ‘face-value voucher’ means a token, stamp or voucher (whether in physical or electronic form) that represents a right to receive goods or services to the value of an amount stated on it or recorded in it.”
The Revenue held that Sch 10A did not apply and that the sale of the passes attracted VAT at the standard rate.
The VAT and Duties Tribunal dismissed the taxpayer’s subsequent appeal, holding that the statutory definition of face-value voucher did not apply on the facts of the instant case. The taxpayer appealed.
Sir Andrew Park:
The words of the definition in para 1(1) of Sch 10A required two elements to be present: (i) there had to be an amount to the value of which the pass conferred on the holder a right to services; and (ii) that amount had to be stated on or recorded in the pass.
Element (i) was the crux of the case. The pass had to represent the right to receive services “to the value of an amount …”. The word “to” meant “up to” the value of the amount. The statute applied only to a voucher which had a monetary limit placed upon it, in the sense that, when the monetary limit was reached, the voucher was exhausted and could not be used any further. A book token was a familiar example: the face value was highly relevant to the holder.
There was no parallel in the case of the London Pass. There were limits on the use of the pass, but they were not monetary limits; and so they were not limits by reference to an “amount”. The effective limit was a limit of date. A pass was valid for a limited number of days after its first use, and expired when those days had elapsed. Neither the aggregate of the gate prices of all the attractions in the booklet nor the aggregate of the gate prices of the attractions visited by the passholder had anything to do with whether, and if so for how long, the pass continued to be in force or not. Another limit—almost entirely a theoretical limit—was a limit by reference to the number of attractions at which the pass could be used. In the extremely rare case of a passholder visiting all of the attractions within the period of the pass’s validity (something which had only ever happened once according to the evidence) the pass could no longer be used. That again was a limit to which the aggregate of the gate prices was irrelevant.
Amount or use
It was possible to work out the arithmetic total of all of the attractions in the booklet or of all of the attractions which a particular passholder visited. That arithmetic total was an “amount”. However, in contrast to examples like book tokens to which the definition of face-value voucher did apply, it was an amount which was wholly irrelevant to the use which might be made of the pass. It might be different if the pass entitled the holder to admission to attractions having a gate price of up to £X. But that was not how the London Pass was structured.
The clear inference from the requirement that, to be a face-value voucher, a voucher needed to state or record the amount “to” which the holder was entitled to receive goods or services was that Sch 10A was dealing with—and only dealing with—vouchers in the case of which the holder might run out of the money represented by them. The London Pass did not expire because the holder had exhausted the monetary amount of it. It expired because it had gone out of time or because (theoretically, though unlikely to happen in practice) it had been used already at all of the attractions.
The taxpayer argued that the London Pass (giving access, as it did, to 55 different attractions) could be regarded as if it were 55 individual passes, each having a face value equal to the normal gate price of the particular attraction to which it related, and each being valid only for between one and six days corresponding to the period of validity of the actual pass purchased by a customer. The pass was not structured in that way, nor realistically could it be. But even if it was it would not create either one face-value voucher to which Sch 10A applied, or 55 separate face-value vouchers, to each of which the schedule applied. Fiftyfive admission tickets, sold together, would not be one face-value voucher, nor would they be 55 face-value vouchers.
The appeal would therefore be dismissed.
