Go City Limited sells sightseeing passes for tourist attractions and transport in London. Customers paid for passes which gave them credits to gain entry to various attractions. The local attractions contracted with Go City and Go City assigned the access rights to the customers.

Go City argued that VAT was only due when the passes were used to visit attractions, and only to the extent used. HMRC disagreed.

The question was how to classify the passes.

Go City successfully argued they were multi-purpose vouchers under Schedule 10A of The Value Added Tax Act 1994, so VAT was only due under the multi-purpose voucher regime and not when they were issued.

However, there were a number of alternative interpretations offered.

HMRC had argued that the passes were “instruments functioning as a ticket” and subject to standard-rated VAT.

The FTT ruled they were not “tickets,” as they offered flexibility, and tickets required a specific and ascertainable admission. FTT agreed that the buyers could use the passes to obtain a ticket, but the passes themselves were not the tickets.

The FTT also rejected the arguments that the customers acquired non-taxable credits for future supplies; or that they acquired the entitlement , taxable in full upfront, of the right to visit the attractions as an aim in themselves (on the lines of the Lycomobile UK Limited case) .

Key takeaway

The decision underscores the importance of correctly classifying vouchers for VAT purposes. It shows that understanding the VAT implications and carefully structuring terms and conditions is critical in a difficult area of VAT.

Reference

Go City Limited v The Commissioners for HMRC - Find Case Law - The National Archives

Go City Limited v The Commissioners for HMRC [2024] UKFTT 745 (TC)