The UK Court of Appeal yesterday [Tuesday] dismissed a challenge by leading retailer Tesco over the tax calculated on its shopping vouchers.

Tesco had argued that the face value of vouchers issued to Clubcard holders should be deducted from the shelf price on products which shoppers buy to earn the vouchers and only included for VAT purposes when the vouchers were redeemed, at a later date.

Lord Justice Schiemann, Lord Justice Latham and Lord Justice Parker unanimously rejected Tesco's argument, finding in favour of the Commissioners for Customs and Excise.

It is possible that Tesco will appeal the verdict, since the company claims the tax treatment of shopping vouchers has implications for the wider UK retail sector. However, the company has been refused leave to take the case to the House of Lords by the appeal court judges.