Compensation or consideration: costly no-shows

The CJEU’s judgment in the joined cases of Air France-KLM and Hop!-Brit Air SAS v Ministère des Finances et des Comptes publics (Cases C-250/14 and C-289/14) (‘KLM’) highlights the importance of focusing on contractual terms in determining whether or not a non-refundable payment for unused services is a taxable supply. Whilst considered in the context of airline ‘no-shows,’ this decision may have repercussions in a number of sectors where services are cancelled or unused after payment has been made, and advisers will need to carefully consider how the terms and conditions of sale are drafted.