Wiltonpark Ltd. – Court of Appeal of England and Wales infers from the size of a fee charged by a club for cashing credit card vouchers that the fee was for access to the club

When a customer of a self-employed lap dancer at a London club ran out of cash, he could use his credit card to purchase vouchers from the club, which he could apply as payment for her services. However, when she tendered the vouchers to the club for cash, she was charged a 20% commission.

In finding that this commission was consideration for the taxable supply of “the provision of the club's facilities to the dancers to enable them to obtain income from non-cash customers” (rather than merely consideration for a VAT-exempt financial service of encashing the vouchers), Richards LJ stated that “a commission of 20% for the encashment of a voucher…is on the face of it very high, particularly as the appellants ran, as they knew, a very low credit risk.”

The facts are somewhat analogous to those in Global Cash Access, where Global was charged for something analogous to cheque-cashing services by the casino in fee amounts ranging from 12.5% down to 2.5%, depending on the size of the individual amounts – with Sharlow JA finding that these were for exempt encashment services. One distinction might be that it would have been less consonant with the “economic realities” (to use a phrase of Richards LJ) to characterize these amount as being paid by Global for access to the casino – and another, that the amounts were high, but not outrageous, when viewed as consideration only for encashing.

Neal Armstrong. Summary of Wiltonpark Ltd & Ors v Revenue & Customs Commissioners, [2016] EWCA Civ 1294 under ETA s. 123(1) – financial service – para. (a).