Marks and Spencers PLC v The Commissioners for HM Revenue and Customs
| Jurisdiction | UK Non-devolved |
| Judge | Mr Justice Nugee,Judge Brannan |
| Neutral Citation | [2019] UKUT 0182 (TCC) |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Subject Matter | Tax,27 June 2019 |
| Date | 27 June 2019 |
| Published date | 27 June 2019 |
UPPER TRIBUNAL (TAX AND
CHANCERY CHAMBER)
UT/2018/0067
BETWEEN
MARKS AND SPENCER PLC
Appellant
-and-
THE COMMISSIONERS FOR
HER MAJESTY’S REVENUE AND CUSTOMS
Respondents
TRIBUNAL:
MR JUSTICE NUGEE
JUDGE GUY BRANNAN
Sitting in public at the Royal Courts of Justice, The Rolls Building, London on 2 and 3
May 2019
Nicola Shaw QC, instructed by Joseph Hage Aaronson LLP, for the Appellant
Andrew Macnab, counsel, instructed by the General Counsel and Solicitor to HM
Revenue and Customs
© CROWN COPYRIGHT 2019
[2019] UKUT 0182 (TCC)
VALUE ADDED TAX – promotional offer of three food items for £10 “with free wine” –
whether output tax on wine element – whether bespoke retail agreement applied to treat
wine as supplied for nil consideration – appeal dismissed
1
DECISION
INTRODUCTION
1. This appeal concerns the correct VAT treatment of a promotional offer made by the
appellant (“M&S”) called “Dine In for Two – £10 – with Free Wine” (“the Promotion”).
The Promotion allowed a customer to choose three food dishes on payment of £10 and obtain
a bottle of wine (or other non-alcoholic beverage) which was described as being provided
“free”.
2. Food items sold separately are zero rated for VAT but wine is standard rated. The issue
in the appeal is whether the £10 should be apportioned between the food and wine, as HMRC
contend, or whether, as M&S contends, the wine was supplied free of charge for VAT
purposes.
3. The First-tier Tribunal (Judge Thomas Scott) (“the FTT”), in a decision released on 10
April 2018, decided that the £10 should be apportioned between the food and wine. M&S,
with the permission of this Tribunal, now appeals that decision.
4. If we decide that the wine was supplied free of charge, a second issue arises. M&S
contends that, in these circumstances, the supply of “free” wine falls within the terms of a
Bespoke Retail Scheme Agreement (“BRSA”) entered into between M&S and HMRC. The
BRSA is an agreement entered into pursuant to Regulations 67 and 68 of the Value Added
Tax Regulations 1995. If, however, we decide that the £10 should be apportioned between
food and wine, it was common ground that the BRSA issue does not arise.
5. The parties asked us to decide these matters in principle, leaving the calculation of the
exact VAT liabilities which would flow from our decision to be determined between them.
6. For the reasons given later in this decision, we have decided that the £10 should be
apportioned between the food and wine. We therefore uphold the decision of the FTT and
dismiss this appeal.
7. For simplicity, decisions of the Court of Justice of the European Union and, prior to
2009, Court of Justice of the European Communities are referred to as decisions of the
“CJEU”.
THE FACTS
8. The following summary of the facts is taken from [21]-[46] of the FTT’s decision and
references in square brackets are references to the relevant paragraphs in that decision.
9. In March 2014 M&S first informed HMRC of its plan to change its existing
promotional offer ‘Dine In for £10’. Under the new offer (the Promotion) the customer would
be entitled to buy three specified items – a main course, side dish and dessert – for £10, and
would be entitled to a “free” bottle of wine or alternative beverage. (FTT [27])
10. Under the previous “Dine In” promotion, M&S offered customers three food items and
a bottle of wine for £10. (FTT [34])
11. The Promotion was introduced in May 2014 and was offered for limited periods of time
in subsequent periods. It was not available online. It was described in marketing and
promotional material, both in-store and on M&S’s website, as “Dine In for £10 with Free
Wine”. Instead of wine, customers could choose certain non-alcoholic beverages available
under the Promotion. (FTT [36])
12. The detailed terms and conditions of the Promotion were not available in stores. On
the M&S website, typical terms and conditions were stated as follows:
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