When I came to read the March edition of De Voil VAT Intelligence, I was glad to see it was not 1st April as two of the cases had names that jumped out as less than ordinary. One was Lunar Missions Ltd and the other was Snow Factor Limited.
It turned out that Lunar Missions was about tax points and vouchers. The appellant had used crowdfunding to raise money to fund an unmanned robotic landing module to the South Pole of the Moon, which apparently has not been explored by previous missions. The company intends to use pioneering technology to drill down to a depth of between 20m and 100m, thereby accessing lunar rock aged up to 4.5 billion years. This would improve scientific understanding of the origins of our solar system, planet, and the Moon.
The plan is to place a contemporary time capsule inside the borehole so formed. This would contain a public and a private archive. For £60 you can reserve yourself a Digital Memory Box to be included in the private archive. Inside the box you will be able to store either digital space (for data) or a strand of hair or a combination of both. The company sends you a voucher for the value equivalent to your pledge.
The question before the Tribunal was whether the sums received in response to this invitation were:
- Prepayments for supplies of services, in which case the tax point was the date of receipt;
- Payments for single purpose vouchers, in which case the tax point was still the date of receipt; or
- Payments for face value vouchers that were not single purpose vouchers, in which case the tax point was deferred until the date the vouchers were redeemed.
The answer had a knock-on effect on the date the company was liable to be registered.
The Tribunal found that the payments were for single purpose vouchers and the tax point was the date the company received the money from the crowdfunders.
This case was a reminder of the existence of the 13th Group of VAT Act 1994, Schedule 7A, which, from 1 April 2013, extended the reduced rate to passenger transport “by means of a cable-suspended chair, bar, gondola or similar vehicle designed or adapted to carry not more than 9 passengers”.
I suspect that for many this makes us think primarily of ski slopes (and other socially important venues in need of special tax treatment). A Google search shows three UK cable cars, including the Emirates Air Line, apparently run by Transport for London, and described as “London’s newest public attraction”.
But cable cars have a more serious public transport potential as they don’t have to be just up and downhill. For example, the suggestion has been made that cable cars could alleviate congestion problems in Oxford and would be 15 times cheaper than trams.
Elsewhere potential has become reality. On my holidays last August, I travelled in the Portland Aerial Tram (pictured below), which was very much public transport rather than entertainment. The Tram provides a link between Oregon Health & Science University and the South Waterfront District of Portland.
So back to Snow Factor. As with zero-rated passenger transport, the legislation denies reduced-rating where:
- The transport is to, from or within a place of entertainment, recreation, amusement or of cultural, scientific, historical, or similar interest; and
- The person who supplies it, or a person connected with them, supplies admission to that place.
Snow Factor is based at Soar INTU at Braehead in Glasgow, a large leisure and adventure complex, including an indoor snow dome. There are lifts to transport passengers to the top of two indoor ski slopes.
Snow Factor argued that the sale of a lift pass did not supply the right of admission to, or a right to use, the snow dome. It was not mandatory to buy a lift pass to access the main slope or any part of the snow dome. It merely gave the right to use the lift.
HMRC argued that Snow Factor’s supply comprised both the use of the lifts and admission to use all the facilities at the snow dome. Therefore, it was excepted from reduced-rating. The Tribunal agreed.
Could VAT get any more exciting?
So, it wasn’t April Fools’ Day. In just one month (January 2018) the decisions of the First-tier Tax Tribunal have ranged from the South Pole of the Moon to a shopping centre in Glasgow, from digital memory boxes to ski slopes. You never know what to expect when working in VAT.