The money paid to a resort when entering a point system is quite challenging to understand and we all have different views. With respect to the Customs and excise HMRC they had an issue with MacDonalds resorts in the UK. MacDonalds Challenged the HMRC view as to VAT liability therefore. To the issue to the EU in Brussels for adjudication.
See Below
RDO article says:-
Brussels 20th December 2010 – The European Court of Justice has released its decision in the case involving Macdonald Resorts Limited (MRL) concerning the VAT treatment of points. The HM Revenue & Customs argued that the supply made by MRL was a supply of club membership and all points’ sales were subject to UK VAT. MRL argued that the supply of points was linked to immovable property and should be subject to VAT where the property is located. The decision is a win for MRL in that VAT should be accounted for by reference to the location of the accommodation rather than wholly in the UK. An added bonus however is the fact that the Court has ruled that VAT becomes due when points are redeemed rather than when points are sold.
MRL were advised by Paul Stewart of KPMG LLP and Paul has provided a summary of the case and what it means, which can be downloaded below. If you would like to discuss any aspect of the case please do not hesitate to contact Paul.
The EU Judgement
In Macdonald Resorts Ltd v HMRC (ECJ Case C-270/09), a Scottish company (M) sold ‘timeshare’ interests in properties in Spain. The Tribunal held that the company was making standard-rated supplies of services and that the place of supply was in the UK. The company appealed to the CS, which referred the case to the CJEC for rulings on the interpretation of the EC Sixth Directive.
Advocate-General Trstenjak expressed the Opinion that ‘a supply, such as that performed by (M), in the form of the grant of contractual rights (points rights)which entitle the purchaser to points redeemable annually for the occupation and use of timeshare accommodation in (M’s) resorts’, was a ‘service connected with immovable property’ within Article 9(2)(a) of the EC Sixth Directive.
These means:- that when a consumers buys into a points system all they are paying is the rights to join the club. “grant of contractual rights (points rights) which entitle the purchaser to points redeemable annually”
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Therefore if you acquire a fixed week the timeshare is equity based timeshare and has value whereas a point system has no underlying value. Yet surprisingly resorts believe that the latter is worth more as they charge more or an up lift when you exchange your fixed timeshare.
When locked in to the points system you have the rights, as that right is what the consumer purchased, however is that right reciprocal to the clubs who purport to lock you in to paying maintenance fees?
They did not buy a reciprocal right?
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MacDonalds Say:-
The proposed points’ club system will allocate points on an agreed scale that will allow members to utilise a more flexible reservation system including the right to save or borrow points to/from a future year.
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Not (only 1 year rollover is mentioned)
And
Who agreed the scale?
How much are they worth?
What’s the conversion?
When the EGM’S took place no one knew what would happen!!! Strange that people were expected to vote on product which had not been agreed or worked
For more information regarding this article or assistance in any other timeshare related issues please contact the TCA on 01908 881058 or email: info@TimeshareConsumerAssociation.org.uk