United Kingdom - Total loses court battle over VAT payments

Total operated a sales promotion scheme whereby people who bought fuel from its garages collected electronic points. These points could be exchanged for vouchers redeemable at participating retailers.

Total argued that it could retrospectively reduce the VAT it accounted for on the sale of the fuel by the value of the vouchers transferred to the customer when they redeemed their points.

HMRC disagreed, believing that VAT was due on the full price of the fuel sold.

Total won its case in the High Court last November, but the Court of Appeal has now reversed that decision.

Steve Hodgetts, VAT partner at accountants Baker Tilly, said: "Total were successful at the High Court last November and many retailers operating similar sales promotion schemes may have begun to reduce the VAT they pay to HMRC.

“The decision of the Court of Appeal means that this is no longer possible, and retailers should revert to paying VAT on the full value of goods sold."