The appellant ("Med"), which marketed hotel accommodation in the Mediterranean and the Caribbean through a website, required a customer to pay the whole of the agreed sum before arriving at the hotel, and Med only paid the hotel a lower sum for the holiday after it had ended pursuant to an accommodation agreement in which it was styled as agent. Med was required to charge U.K VAT on the sums collected by it unless it acted solely as an "intermediary," which the court found to be essentially the same as an agent.
Before concluding that Med was not required to collect VAT, Lord Neuberger found that Med was providing accommodation as an agent for the hotels, notwithstanding that Med:
- failed to account to the hoteliers for cancellation charges and interest on the amounts deposited (which Lord Neuberger stated, at para. 44, might represent a breach of the agency agreement or reflect Med's relative bargaining position)
- dealt with matters of complaint and compensation in its own name and without reference to the hotelier (but with any compensation ultimately recovered from the hotelier)
- treated the deposits as its own money
- reserved rooms in advance of sales (although the related payments were recoverable against the next season's revenues if the current season's bookings were insufficient)