VAT consideration and direct link test applied to trophies and medals given at a commercial dinner event

Trophies and medals awarded at a commercial dinner were treated as supplied for consideration because there was a sufficient direct link between the ticket price and the awards. The transaction had to be viewed as a whole, and the dinner, presentation ceremony, sponsorship income and prizes formed one self-supporting event. It was not necessary to isolate a precise part of each ticket price as the cost of the trophies. The deeming provision for goods supplied otherwise than for consideration did not apply, so no separate output VAT was chargeable on the awards.

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Issues: Whether the trophies and medals awarded at the annual dinner were supplied otherwise than for consideration, so as to attract output tax under Schedule 2, paragraph 5 and Schedule 4, paragraph 7 of the Value Added Tax Act 1983, or whether they formed part of the consideration for the dinner tickets.

Analysis: The relevant inquiry was whether there was a direct link between what the attendees paid for the dinner tickets and the provision of the awards. The transaction had to be viewed as a whole, not artificially split into separate parts. The evidence showed that the dinner, the presentation ceremony, the sponsorship income and the awards were all part of one self-supporting event, and the awards were a vital feature of what the ticket price secured. It was immaterial that no identifiable part of each ticket price could be isolated as the precise cost of the trophies. Paragraph 5 of Schedule 2 was directed to a different situation, namely a gift of business goods without payment of output tax after input tax credit had been obtained.

Conclusion: The awards were supplied for consideration within the overall transaction, so the statutory deeming provision for goods disposed of otherwise than for consideration did not apply and separate VAT was not chargeable on the trophies.

Final Conclusion: The appeal failed because the awards formed part of the consideration for the event as a whole, leaving no separate output tax liability on the trophies and medals.

Ratio Decidendi: Where goods supplied at a commercial event are an integral part of what attendees pay for, consideration may be established by a sufficient direct link between the ticket price and the supply, even if no precise part of the price is separately allocated to the goods.

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