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The Commissioners of HMRC V KE Entertainments Ltd

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The Commissioners of HMRC V KE Entertainments Ltd

29 June 2020

The United Kingdom Supreme Court has issued its judgment in this case, following the “remote” appeal which took place on 28th and 29th April 2020. A copy of the judgment may be found here. (

KE Entertainments Limited (the “Taxpayer”) had appealed to the Supreme Court against the Opinion of the First Division of the Court of Session, issued on 13th December 2018, by which the Commissioners’ appeal against the judgments of the First Tier and Upper Tribunals had been allowed.

The particular circumstances of the case were that the Commissioners’ guidance had historically provided that VAT, which was formerly charged on bingo, should be calculated on what was known as the “game basis”. The Commissioners’ guidance changed so as to indicate that, where appropriate, taxpayers should instead use the “session basis” for the calculation of their taxable turnover.  In short, the case concerned the question of whether such a change in the guidance issued by the Commissioners, by way of “Business Brief”, had effect so as to amount to a “price reduction” for the purposes of Article 90 of the Principal VAT Directive and Regulation 38 of the Value Added Tax Regulations 1995.

The Supreme Court unanimously rejected the Taxpayer’s appeal. The Court held that there had only been one correct method of accounting for VAT on the Taxpayer’s activities (on the facts of the case), namely, the “session basis” and that the Taxpayer had accordingly overpaid VAT historically. It had made a claim on that basis, subject to the applicable time limits in the Value Added Tax Act 1994, section 80. It was not, however, entitled to maintain that either method of accounting had been lawful and valid, and nor was it correct in its argument that a mere change in the Commissioners’ guidance (which did not have the force of law) amounted to a “price reduction”.

The case provides important guidance both in relation to the concept of “price reduction” but also concerning the status of guidance given by the Commissioners by way of various publications.

David Thomson QC, and Elisabeth Roxburgh, both of Axiom Advocates, represented the Commissioners in successfully resisting the Taxpayer’s appeal.”