UK: VAT Rules for London Pass Vouchers

In a recent ruling concerning the case between Go City Limited, previously known as Leisure Pass Group Limited, and HMRC, the First Tier Tribunal (FTT) ruled in favor of Go City Limited. Go City Limited is a company that sells two types of pass tickets in London: London Pass and London Explored Pass (Passes). Both are used for visiting various tourist attractions and using certain means of transportation.

The question raised before the FTT is whether these Passes fall under the scope of VAT.

Background of the Case and Court Decision

Go City Limited has sold Passes since 1999, and HMRC treated them as face-value vouchers. Face-value vouchers were considered vouchers, stamps, or tokens that provide the consumer with the right to receive goods or services in the amount of the voucher value. Simply put, they were treated as multi-purpose vouchers (MPV), meaning that  VAT was charged when the services or goods to which the voucher is related were supplied.

However, HMRC has changed its view on how it treats Passes. Go City Limited appealed against this change, which affected its business model, and lost before the VAT Tribunal and High Court in 2007. After losing these initial cases, Go City Limited made adjustments to the terms under which the Passes were sold and even later received an explanation that under new Voucher Directive rules, Passes would not be considered as tickets and, thus, would not fall under the VAT scope.

Nevertheless, with the implementation of the Voucher Directive, Passes were considered tickets, and the HMRC instructed Go City LImited to pay nearly GBP 9 million for VAT purposes.

This led to Go City Limited's appeal and FTT's conclusion that Passes are MPVs since services are provided only when the consumer uses them, not at the point of sale. Following this conclusion, Passes are considered vouchers, not tickets.

Conclusion

Since the Voucher Directive was changed in 2019, this ruling provides valuable explanations and opinions on how the new rules apply and differentiate VAT rules for tickets and vouchers, especially MPVs. 

It shows that HMRC did not interpret the rules appropriately, which resulted in the wrong assessment of due VAT from Go City Limited.

Source:  First-Tier Tribunal Case Number: TC09263, Casemine, HMRC - VAT: treatment of vouchers from 1 January 2019