New Judgment: Commissioners for Her Majesty’s Revenue and Customs v Secret Hotels2 Ltd  UKSC 16
05 Wednesday Mar 2014
On appeal from:  EWCA Civ 1571
This appeal concerned the liability for VAT of a company known as “Med”, which marketed hotel accommodation in the Mediterranean and the Caribbean through a website. The customer had to pay the whole of the sum he agreed with Med to pay for the holiday (“the gross sum”) before arriving at the hotel. However, Med only paid the hotel a lower sum (“the net sum”) for the holiday after it had ended. Held: the contractual documentation supported the notion that Med was an agent, it also supported the conclusion that Med was an intermediary, and the economic reality did not assist a contrary view. Once it was decided that Med was the hoteliers’ agent in relation to the supply of accommodation to customers as a matter of English law, it followed that it was an intermediary for the purpose of article 306.1 of the Principal VAT directive, and therefore liable to pay VAT on the gross sum paid by the customer to Med.