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Crowdfunding projects - Time of supply - Lunar Missions Limited

January 2018

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Lunar Missions Limited vs HMRC

Crowdfunding project to raise monies to send a research module to the moon. Investors receive digital voucher entitling them to receive various 'perks' commensurate with level of investment. Whether funds represent pre-payments for services to be taxed at time consideration received . Whether vouchers constitute single or multi-purpose face-value vouchers .

An interesting one this! Lunar Missions, via a crowd funding platform, offered investors various benefits in the event that sufficient funds were raised to send a module to the moon. At the most basic level an investor received online access to photos, videos and news whilst persons investing significant amounts would, amongst other things, be entitled to have their name inscribed on the landing module.

HMRC suggested that payments received were either pre-payments for services to be provided or, in the alternative, single purpose vouchers - in both cases a tax point would be triggered at the date payment was received.

The appellant, quoting the recent case of Findmypast, argued that the amounts received could not be pre-payments as it was not known at the time payment was made whether the project would secure enough funding for lift off!

With regard to the vouchers the issue turned on whether the benefits investors would receive amounted to single or multiple services and, specifically, whether the right to upload digital material to be stored on the moon constituted the same supply as the right to send a locket of hair to the moon!.

The law states that the time of supply of a face-value voucher, which entitles the buyer to receive goods or services of a single type which are taxable at a single rate of VAT, is the time payment for the voucher is received. This contrasts with other vouchers - where tax is due at the time the voucher is redeemed.

The judge agreed that the investments to the crowdfunding project did not constitute pre-payments. However, it held that the vouchers were single purpose vouchers which rather made the pre-payment issue academic.

The appellant was consequently required to register for VAT with effect from December 2014.

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