Key Facts
- •Bulb Energy Limited's "refer a friend" (RAF) scheme offered credits against energy charges to both referrers and recruits.
- •The appellant (Simple Energy Limited, Bulb's parent company) appealed HMRC's decision that successful referrals constituted non-monetary consideration for energy supplied to referrers.
- •Referrers received a £50 credit (or £25 for a single energy supply switch) if a recruit switched their energy supply using their referral link.
- •The vast majority of customers (over 90%) treated the credit as a discount on their energy bill, with only about 10% opting for cash payment.
- •Bulb's marketing materials promoted the RAF scheme as a way for customers to save money on their energy bills.
- •Bulb's terms and conditions referred to the credit as a "reward", not a discount.
Legal Principles
A provision of services is taxable only if there's a direct link between the service and consideration received, capable of being expressed in money.
Staatssecretaris van Financiën v Coöperatieve Aardappelenbewaarplaats (C-154/80)
Mandatory charges imposed by statutory obligation are not consideration for a supply.
Apple and Pear Development Council v Customs and Excise Commissioners (C-102/86)
A supply of services is taxable only if there's a legal relationship with reciprocal performance.
Tolsma v Inspecteur der Omzetbelasting Leeuwarden (Case C-16/93)
The taxable amount cannot exceed the sum paid by the final consumer.
Elida Gibbs Ltd v Customs and Excise Commissioners (C-317/94)
A direct link must exist between the supply and consideration received, including non-monetary consideration.
Naturally Yours Cosmetics Ltd v Customs and Excise Commissioners (C-230/87)
Non-monetary consideration can include actions beyond a simple transaction; there must be reciprocity.
Empire Stores Ltd v Customs and Excise Commissioners (C-33/93)
A discount is given for satisfying a contingency, not for providing a service; the customer must be carrying on something in the nature of an economic activity.
Everest Ltd v HMRC , [2010] UKFTT 621 (TC)
For non-monetary consideration, there must be a direct link between the action and the consideration; the recipient must provide something to the supplier.
Various cases discussed including Mirror Group, Boots, and Littlewoods
Outcomes
Appeal dismissed.
The Tribunal found that successful referrals constituted non-monetary consideration for energy supplied to referrers, satisfying the tests for contractual reciprocity.