The case centred on Vodafone’s request in January 2007 for a repayment of £4,173,388 of over-declared output tax in its VAT returns between January 2004 and January 2006. This overpayment related to Vodafone’s participation in the Nectar Card scheme and to its view that it should have taken into account in calculating its output tax liabilities the cost of the Nectar points awarded to its customers.

HMRC disagreed at the time that there was an over-declaration of output tax and rejected the claim. This rejection remains the subject of a separate appeal.