In a £60 million dispute between the AMEX group and HMRC, the Tax Tribunal has held in favour of AMEX.
The case raised the vexed and perennial question of analysing triangular and linear supply situations, where the issue is whether A makes its supplies to B or C, or both. It also involved the analysis of how money moves in the payment card industry in general, and within the AMEX group in particular. It resurrected an issue, thought to be long decided, as to whether money can move by book keeping set off, or whether it has to be paid gross. Above all, the Tribunal (chaired by the President, Greg Sinfield) threw new and helpful light on the approach to contract analysis alongside that of economic reality, and how to reconcile the two.
In finding for AMEX on substantially every issue, the Tribunal reaffirmed the classical analysis of card transactions (see Diners Club), and emphasised that booking-keeping entries can suffice as consideration for a supply (see FDR). It also held that economic reality was to be considered in all cases, not just those where purely artificial transactions are alleged. It listed various relevant features, such as links between the entities, the level of consideration/profit, and the commercial reason why the payer of the consideration made the payment.