The taxpayer operates self-service coin kiosks that are often found in supermarkets. Customers deposit loose coins in the machines in exchange for either a voucher or to make a donation of the money to charity. Where the customer opts to receive a voucher in exchange for the spare change, the taxpayer charges a 9.9% commission. A voucher for the net amount is provided to the customer who can redeem this for cash (higher denominations) or use it to reduce the cost of their shopping. The dispute concerns the VAT treatment of this commission. The First-tier Tribunal (FTT) has concluded that the taxpayer’s service is exempt from VAT.
The taxpayer argues that the fees are exempt under VATA Schedule 9, Group 5, Item 1, as an exchange of one form of money for a more convenient form of money (a voucher) that involves a change in the legal and financial position of the parties. Alternatively, the taxpayer argues that the fees are a supply of security for money. HMRC argue that the taxpayer is making a standard rated supply of a coin counting and/or sorting service. Whilst accepting the voucher may be a security for money, HMRC’s view is this formed part of a wider standard rated supply.
The FTT concluded that the economic reality is that the arrangement for obtaining the vouchers and the level of commission charged mean that the supply goes beyond just a coin counting service and is a single supply of exchanging coins for a more convenient payment format (the voucher). Nothing in the EU VAT Directive prevents the scope of the exemption from applying to a service consisting of exchanging sterling in one denomination for sterling in another. The customer had ownership of the coins and afterwards has ownership of a voucher for money or money’s worth, so the legal and financial situation changes.
The FTT allowed the taxpayer’s appeal concluding that the taxpayer’s services fall within VATA 1994 Schedule 9 Group 5 Item 1.
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