Simple Energy Limited v The Commissioners for HMRC
Decision date: 17 November 2023
Neutral citation: [2023] UKFTT 976 (TC)
Overall AI summary confidence: high
Short overview
This short overview is intended to summarise the case, issues and outcome so far as they are supported by the judgment.
AI confidence in this short overview: high
This tax appeal concerned whether Bulb Energy’s "refer a friend" credits were non-monetary consideration for VAT or merely discounts reducing the taxable value of energy supplies. The First-tier Tribunal held that successful referrals constituted services supplied to Bulb (non-monetary consideration) with a direct contractual link and reciprocal bargain such that the value of the service equalled the RAF credit. The appellant’s challenge was dismissed.
Ratio decidendi
This summary is intended to identify the ratio decidendi, meaning the legal reasons for deciding and the binding part of the decision.
AI confidence in this ratio decidendi summary: high
The tribunal applied and endorsed a test that non-monetary consideration requires a direct link between the customer’s act and the supplier’s obligation, reciprocity between the parties, and a capacity for subjective monetary valuation of the consideration; customer acts dissociable from their role as consumer (e.g. promotional introductions) can amount to a separate economic activity and thus non-monetary consideration. The form of payment (credit against future supplies rather than cash) does not preclude finding consideration.
Obiter dicta
This summary is intended to identify obiter dicta, meaning observations made by the way that were not necessary to deciding the case and are not binding.
AI confidence in this obiter dicta summary: medium
The judgment observed (obiter) that the distinction between discounts and non-monetary consideration lies on a spectrum and that modest or contingent promotional acts may still qualify where parties ascribe value; it also warned against overly formalistic limits that could undermine VAT neutrality and suggested a rational distinction between recruit discounts and referrer rewards.