Findmypast – Inner House of the Court of Session finds that the time of a supply of services was accelerated by prepayment only where the services were precisely identifiable

ETA s. 152(1) provides that GST/HST for a taxable supply becomes payable if the consideration is prepaid. However, ETA s. 168(6) provides that where the value of consideration for a taxable supply is not yet ascertainable, there is a corresponding deferral of the date on which the related GST/HST becomes payable.

The European VAT rules have a similar rule to ETA s. 152(1), which effectively has been restrictively interpreted by the European Court of Justice so as to only apply where there is “precise identification of the goods and services that are to be supplied.” Lord Drummond Young found that this test was not satisfied for a genealogical site, where customers would purchase credits which could be applied during specified time periods to download historical records (e.g., birth and death records) whose number was determined in accordance with parameters that were subject to change by the site – and with a significant number of the credits never being redeemed.

Since the prepayment rule did not apply, there was only a taxable supply of services when the credits were applied by downloading particular records - rather than at the time of the prior purchase of the credits.

Neal Armstrong. Summary of Revenue and Customs Commissioners v. Findmypast Ltd., [2017] CSIH 59 under ETA s. 152(1) and s. 123(1) – service.