Andrew Macnab, representing HMRC, successfully defends Virgin Media’s appeal over VAT on Prompt Payment Discounts

08 Apr 2020
Andrew Macnab

Virgin Media Ltd v HM Revenue and Customs [2020] UKUT 0100 (TCC), 8 April 2020

The Upper Tribunal has dismissed VML’s appeal against the decision of the First-tier Tribunal [2018] UKFTT 556 (TC). VML’s appeal concerns the correct operation of the Prompt Payment Discount (PPD) provisions of paragraph 4(1) of Schedule 6 to the Value Added Tax Act 1994, which provided (prior to its amendment with effect from 1 May 2014) that “[w]here goods or services are supplied for a consideration in money and on terms allowing a discount for prompt payment, the consideration shall be taken for the purposes of section 19 as reduced by the discount, whether or not payment is made in accordance with those terms.” VML provides telecommunications services to customers through fixed lines. Those services include fixed line rental (FLR) with related broadband and telephone services. In the relevant period, VML provided FLR services in return for either (i) monthly payments (e.g. £13.90) or (ii) a single payment for 12 months’ service (e.g.£120). VML contended that the 12 month “saver” option was a “discount for prompt payment” and that paragraph 4(1) applied to deem the monthly customers to have given consideration for the FLR supply to them by reference to a notional monthly figure of £10 (i.e. £120/12), not the actual monthly payment of £13.90. The FTT dismissed VML’s appeal, holding that VML’s services to monthly customers were not “supplied on terms allowing a discount for prompt payment”, because the supply to monthly customers and the supply to saver customers were different supplies on different terms. The Upper Tribunal dismissed VML’s appeal, for the reasons given by the FTT. Having decided the case on that basis, the Upper Tribunal did not find it necessary or appropriate to deal with various further or different arguments for dismissing the appeal relied on by HMRC, which had been rejected by the FTT.

Andrew Macnab, led by Kieron Beal QC (Blackstone Chambers), represented HMRC in the First-tier Tribunal and the Upper Tribunal. Read the full decision here.