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Due consideration
Key points
- Difference between compensation and consideration.
- In Société thermale the CJEU found there was no link between the deposit paid and service to the customer.
- A right to benefit from services can be a supply of services.
- HMRC changed its policy on the treatment of hotel deposits.
- Case law and the contract are important when deciding whether a payment is consideration or compensation.
With the onset of the Covid-19 pandemic and the ensuing disruption to the economy there have been an increasing number of forfeited deposits and payments for supplies that are never made or used. Determining the correct VAT on those payments can be crucial to the success and survival of businesses.
A fundamental question in determining whether a taxable person is subject...
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