VAT briefing for September 2017

Tesco Freetime: loyalty card scheme

In Tesco Freetime Ltd and Tesco PLC v HMRC [2017] UKFTT 614 the First-tier Tribunal (FTT) has given a decision on the VAT treatment of the Tesco Clubcard programme. Under the scheme a customer obtains points for purchases from Tesco or a third party partner which are converted into vouchers. These vouchers are either used to pay for goods in store or online at Tesco or converted into tokens (having a greater value than the vouchers) to redeem at a Clubcard partner (the Reward Partner).

When tokens are redeemed with Reward Partners the Reward Partners invoice Tesco Freetime (a subsidiary of Tesco) for a percentage of the value of the tokens redeemed.

The question for the FTT was whether Freetime could recover the...