The Court of Appeal has published its decision in the long running case of Associated Newspapers Limited v HMRC [2017] EWCA Civ 54 concerning the VAT treatment of retail vouchers given away by newspapers.

The taxpayer ran two business promotions:

  • In the first, customers who bought newspapers for a certain period of time received a free high-street voucher which the taxpayer bought directly from the retailer.
  • In the second, customers accumulated loyalty points which they could later exchange for high-street vouchers which the taxpayer acquired from an intermediary.

The case concerned the input and output VAT treatment of these vouchers.

The Upper Tribunal had previously held that:

  • Output VAT was not due when the vouchers were given away.
  • Input VAT could only be claimed on the vouchers acquired via an intermediary, and not those acquired directly from retailers.

These decisions were cross appealed by both parties.

The Court of Appeal has now held that:

  • The cost of purchasing the vouchers was part of the taxpayer’s overall expenditure in the taxable activity of selling newspapers.
  • There was no need to charge VAT when the vouchers were given away: VAT claimed by the taxpayer would be recovered through the supplies of newspapers they made.
  • No VAT was recoverable on the directly acquired vouchers: the retailers were under no obligation to charge VAT on the vouchers.


Our subscriber guide: Partial exemption & input VAT

Case reference: Associated Newspapers Limited v HMRC [2017] EWCA Civ 54

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