VAT and Financial Services
VAT and Financial Services
VAT and Financial Services takes the reader through the relevant legislation case law, and legal concepts; examines the consequences of outsourcing; looks at the key issues facing financial services and insurance; and discusses the VAT cost sharing exemption. Since the last edition significant changes include: consequences of Brexit, the abolition of Cost Sharing Groups and significant developments in case law.
VAT and Financial Services takes the reader through the relevant legislation and case law, the legal concepts such as time and place of supply, the distinction between goods and services, what is taxable, and the interaction of these elements; examines the consequences of outsourcing (through a detailed study of 10 significant cases); looks at the key issues facing financial services and insurance; and then discusses the VAT cost sharing exemption.
Since the last edition, whilst there have been relatively few legislative changes, there have been some significant changes in HMRC’s interpretation and guidance on issues such as pensions (employers right to VAT recovery on investment management costs) and VAT groups (a restoration of HMRC’s position that existed prior to the Skandia case).
Finance directors and finance controllers in the financial services and insurance sectors and at those who advise these sectors should all find the book helpful.
About the author iii
Acknowledgements iv
Contents v
Tables of authorities xi
- Introduction 1
1.1. Introduction to the first edition, September 2012 1
1.2. Introduction to the second edition, June 2015 4
1.3. Introduction to the third edition, March 2017 5
1.4. Introduction to the fourth edition, June 2022 7
1.5. Introduction to the fifth edition, December 2025 9
- Financial Services 11
2.1. Introduction 11
2.2. Money and money-related services 14
2.3. Securities 22
2.4. Investment funds and wrappers 25
2.5. Derivatives 39
2.6. Intermediary services 45
2.7. Supplies relating to the provision of credit 60
2.9. Islamic finance 72
2.10. Standard rated services 77
2.11. Investment gold 81
- Insurance 84
3.1. Introduction 84
3.2. General (non-life) insurance 91
3.3. Life assurance 96
3.4. Friendly Societies 98
3.5. Insurance intermediary services 99
3.6. Lloyd’s 106
3.7. Insurance claims 109
3.8. Insurers in ‘run off’ 114
3.9. Other types of insurance 115
3.10. Insurance Premium Tax (IPT) 118
- Outsourcing 121
4.1. Introduction 121
4.2. Sparekassernes Datacenter (SDC) v Skatteministeriet (Case C- 2/95) [1997] STC 932 122
4.3. C&E Commrs v Civil Service Motoring Association [1998] STC 111 125
4.4. C&E Commrs v CSC Financial Services Limited (formerly Continuum (Europe) Limited) (Case C–235/00) [2002] STC 57 125
4.5. C & E Commrs v FDR Ltd [2000] STC 672 127
4.6. C & E Commrs v Electronic Data Systems Ltd [2003] STC 688 127
4.7. Century Life plc v C&E Commrs [2000] STC 276 128
4.8. Försäkringsaktiebolaget Skandia (Case C – 240/99) STC 754 130
4.9. C & V (Advice Line) Services Ltd v C & E Comrs (2001) (17310) 132
4.10. Staatssecretaris van Financiën v Arthur Andersen & Co Accountants cs (Case C-472/03) [2005] STC 508 134
4.11. JCM Beheer BV v Staatssecretaris van Financien (Case C-124/07) [2008] STC 3360 136
4.12. Aspiro (formerly BRE Ubezpieczenia Sp. z o.o.) v Minister Finansów (Case C – 40/15) 137
- Input Tax and VAT recovery 138
5.1. Introduction 138
5.2. Definition of input tax 138
5.3. Who can recover input tax 138
5.4. Blocked input tax 139
5.5. Purchases from overseas suppliers 142
5.6. Partial exemption 142
5.7. Capital goods scheme 167
5.8. Recovery of VAT incurred in the EU 172
- Legislation, Case Law and Appeals 175
6.1. Introduction 175
6.2. EU legislation 175
6.3. Primacy of EU Directives over national legislation and European Union (Withdrawal) Act 2018 176
6.4. UK legislation 177
6.5. Appeals 177
6.6. Legislation relevant to the financial services and insurance sectors 178
- VAT supply and liabilities 179
7.1. Meaning of supply 179
7.2. Supply of goods 180
7.3. Supply of services 181
7.4. Supply of neither goods nor services 181
7.5. Place of supply 183
7.6. Time of supply 188
7.7. Taxable supplies 192
7.8. Exempt supplies 193
7.9. Outside the scope supplies 193
7.10. Reverse charge 194
Appendix A – Contracts of Insurance 196
Appendix B – Lloyd’s VAT Arrangements 201
Appendix C – Extract from ‘HMRC ABI Partial Exemption Guidance for the Insurance Sector’ 215
Appendix D – Transfers of business as a Going Concern – Legal Extracts 240
Appendix E – EU member states as at 1 January 2021 244
Appendix F – Terminal markets listed in VAT (Terminal Markets) Order 1973 (as amended) 245
Index 247