Tax Dispute Resolution – No Such Thing as a Free Bottle of Wine
There really is no such thing as a free lunch or as in the case of the above by Marks & Spencer PLC. v The Commissioners for Her Majesty's Revenue and Customs - Case Number: UT/2018/0067 which came before Upper Tribunal Judges Nugee & Guy Brannan, a free bottle of wine.
An appeal was brought to Upper Tax Chamber by Marks and Spencer’s against the ruling by HM Revenue & Customs that VAT of 20% was payable by the Appellant for each bottle of wine sold as part of its promotion offer Dine In for £10.
The Justices were to determine whether in relation to the promotional offer of three food items for £10 “with free wine”, whether output tax on the wine element was payable and whether bespoke retail agreement applied to treat wine as supplied for nil consideration.
The Appellant’s contention was that the wine was advertised as free and as such no output tax was payable. In dismissing the appeal the Justices held that the wine was the single most expensive item purchased out of the four items sold as part of the deal and that the deal was in fact £10 for four items including wine and as such output tax was payable.
This acts another reminder of the importance of carefully considering the legal implication of something as mundane as a sales promotion