VAT and Financial Services (fourth edition)

VAT and Financial Services (fourth edition)

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.

Category: Finance, Tax
Series: VAT Guides
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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 third edition, there have been significant developments, including (most obviously) Brexit.

The key VAT change is that EU legislation is no longer primary legislation (although many EU VAT principles, obligations and rights have been ‘retained’) and ECJ court decisions are, in general, no longer binding although ‘a court or tribunal may have regard to anything done on or after exit day by the European Court, another EU entity or the EU so far as it is relevant to any matter before the court or tribunal’ (European Union (Withdrawal) Act, 2018 s6(2)). Also, the Court of Appeal decision in HMRC v Perfect [2022] EWCA Civ 330, which is an excise duty case but more widely applicable, confirmed that decisions from any referrals to the ECJ made before 31 December 2020 remain binding on the UK even if the decision is issued after that date.

In addition to this general change, there have been some more specific changes, for example the changes to the VAT (Specified Supplies) Order 1999, which now treats supplies to persons in the EU in the same way as supplies to persons outside the EU and some changes to the status of EU pension funds.

A further change has been to the status of Cost Sharing Groups, an arrangement that allows persons who carry on certain activities to form a group to share costs without creating sticking VAT. As Cost Sharing groups are no longer available to the financial services and insurance sectors, the chapter and appendix covering these have been removed from this edition.

Appendices include: contracts of insurance; Lloyd’s VAT arrangements; HMRC ABI partial exemption guidance for the insurance sector; TOGC legal extracts; and the VAT territory of the EU.

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.

Mark Chesham has specialised in advising businesses in the financial services and insurance sectors for over 30 years. He started with HM Customs and Excise, working in a specialist insurance team, before spending 15 years in two of the ‘Big 4’ accounting firms. He set up his own consultancy practice in 2005 and was Director of Indirect Tax Services at Moore. He now operates as a consultant based in Portugal. He is a member of the the VAT Practitioners Group.

The author can be contacted at

About the author 
Tables of authorities 
1. Introduction 
1.1. Introduction to the first edition, September 2012 
1.2. Introduction to the second edition, June 2015 
1.3. Introduction to the third edition, March 2017 
1.4. Introduction to the fourth edition, June 2022 
2. Financial Services 
2.1. Introduction 
2.2. Money and money-related services 
2.3. Securities 
2.4. Investment funds and wrappers 
2.5. Derivatives 
2.6. Intermediary services 
2.7. Supplies relating to the provision of credit 
2.8. Debts and related services 
2.9. Islamic finance 
2.10. Standard rated services 
2.11. Investment gold 
3. Insurance 
3.1. Introduction 
3.2. General (non-life) insurance 
3.3. Life assurance 
3.4. Friendly Societies 
3.6. Lloyd’s 
3.7. Insurance claims 
3.8. Insurers in ‘run off’ 
3.9. Other types of insurance 
3.10. Insurance Premium Tax (IPT) 
4. Outsourcing 
4.1. Introduction 
4.2. Sparekassernes Datacenter (SDC) v Skatteministeriet (Case C- 2/95) [1997] STC 932 
4.3. C&E Commrs v Civil Service Motoring Association [1998] STC 111 
4.4. C&E Commrs v CSC Financial Services Limited (formerly Continuum (Europe) Limited) (Case C–235/00) [2002] STC 57 
4.5. C & E Commrs v FDR Ltd [2000] STC 672 
4.6. C & E Commrs v Electronic Data Systems Ltd [2003] STC 688 
4.7. Century Life plc v C&E Commrs [2000] STC 276 
4.8. Försäkringsaktiebolaget Skandia (Case C – 240/99) STC 754 
4.9. C & V (Advice Line) Services Ltd v C & E Comrs (2001) (17310) 
4.10. Staatssecretaris van Financiën v Arthur Andersen & Co Accountants cs (Case C-472/03) [2005] STC 508 
4.11. JCM Beheer BV v Staatssecretaris van Financien (Case C-124/07) [2008] STC 3360 
4.12. Aspiro (formerly BRE Ubezpieczenia Sp. z o.o.) v Minister Finansów (Case C – 40/15) 
5. Input Tax and VAT recovery 
5.1. Introduction 
5.2. Definition of input tax 
5.3. Who can recover input tax 
5.4. Blocked input tax 
5.5. Purchases from overseas suppliers 
5.6. Partial exemption 
5.7. Capital goods scheme 
5.8. Recovery of VAT incurred in the EU 
6. Legislation, Case Law and Appeals 
6.1. Introduction 
6.2. EU legislation 
6.3. Primacy of EU Directives over national legislation and European Union (Withdrawal) Act 2018 
6.4. UK legislation 
6.5. Appeals 
6.6. Legislation relevant to the financial services and insurance sectors 
7. VAT supply and liabilities 
7.1. Meaning of supply 
7.2. Supply of goods 
7.3. Supply of services 
7.4. Supply of neither goods nor services 
7.5. Place of supply 
7.6. Time of supply 
7.7. Taxable supplies 
7.8. Exempt supplies 
7.9. Outside the scope supplies 
7.10. Reverse charge


Appendix A – Contracts of Insurance 
Appendix B – Lloyd’s VAT Arrangements 
Appendix C – Extract from ‘HMRC ABI Partial Exemption Guidance for the Insurance Sector’ 
Appendix D – Transfers of business as a Going Concern – Legal Extracts 
Appendix E – EU member states as at 1 January 2021 
Appendix F – Terminal markets listed in VAT (Terminal Markets) Order 1973 (as amended)


Product Format
234 x 156
Publication Date
Jul 28, 2022
Number of Pages
Product Format
234 x 156
Publication Date
Jul 13, 2022
Number of Pages