Summary 
 
This was an appeal by HMRC to the Upper Tribunal (UT) against a decision by the First-tier Tribunal (FTT) in favour of the Respondents (‘Freetime’). 
 
The appeal related to the VAT treatment of one feature of the loyalty scheme operated by the Tesco group of companies, the Tesco Clubcard. In 1999, the feature of the scheme to which this appeal relates was introduced. The option of using the vouchers to make a purchase from a Tesco store or online continued, but a Clubcard Member could instead have the vouchers converted to Reward Tokens, which could then use to make a purchase from a third-party, known as a Deal Partner. Because the Reward Tokens have a greater face value than the vouchers for which they are exchanged, this feature of the scheme is known as Partner Boost. The question in this appeal was whether the company, which contracts with the Deal Partners and