VAT: Coinstar Ltd – Upper Tribunal Decision | KPMG | UK
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VAT: Coinstar Ltd – Upper Tribunal Decision

VAT: Coinstar Ltd – Upper Tribunal Decision

This case concerns the liability of fees charged for using Coinstar machines.


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The dispute concerns the liability of the fees charged by Coinstar. It operates self-service coin kiosks found in supermarkets. Customers deposit loose coins in the machines in exchange for either a cash voucher or to make a donation to charity. Where the customer opts for a cash voucher, the taxpayer charges a 9.9 percent commission. A voucher for the net amount is provided to the customer, who can redeem this for cash or use it as part payment for his supermarket shopping. The Upper Tribunal (UT) has upheld the First-tier Tribunal’s (FTT) earlier decision that there is a single exempt overarching service of exchanging coins for a voucher and the way the service was advertised was irrelevant.

HMRC argued the fee was standard rated based on their interpretation of the charge being levied for a coin counting/sorting service. The taxpayer argued that the fee should be exempt as it was in its view for a financial service of changing lots of loose coins into a more convenient form (a voucher) and any counting and sorting was certainly necessary for, but ancillary to, that main aim of the customer.

The FTT said the fee was exempt for a single overarching service of exchanging coins for a voucher or, alternatively, that obtaining the voucher was an aim in itself and not ancillary to the coin counting and sorting Coinstar provided. The UT has found no error in law. Economic reality meant no one would pay 9.9 percent to just have coins counted. A mere coin counting service would also return the coins. The customer started out owning coins and wound up with a (lower value) voucher, so there had been a change in the financial and legal situation and therefore the exemption applied. It did not matter that the transaction involved only sterling.

For further information please contact:

Karen Killington

Steve Powell

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