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VAT & Financial Services

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Advising FS and insurance businesses (including intermediairies) on the VAT exemptions that apply in the financial and insurance services sectors, one of the most complex areas of VAT.

Financial Services

Although ‘financial services’ covers a wide range of providers, there are specific VAT issues and opportunities that apply to particular financial services and we have years’ of experience advising financial services clients on VAT, especially minimising irrecoverable VAT.

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Non-VAT registered Providers

Many financial service providers aren’t VAT registered, but this doesn’t mean they are outside the scope of VAT. There can also be hidden VAT costs for those that aren’t VAT registered, and we have experience of assisting such businesses to minimise their VAT risk.

 

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Specialists In Intermediary Services

One of the key areas in which VAT impacts on financial services is the VAT treatment of broker/intermediary services, as any VAT that applies is typically an irrecoverable cost. We can help businesses identify and implement opportunities to apply VAT exemption.

 

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Case Study

VAT & Financial Services

VAT on starter business investments

 

Intro

Our client ran a firm that specialised in finding investors for high-tech startups. They had a complex commission structure partly based on the potential future value of the businesses into which investment was placed.

The Issue

Our client had received conflicting advice on the VAT treatment of its activities.

How we solved it

We reviewed the activities, its sources of income including the mechanism under which it was paid for its services. We reached a conclusion, based on sound analysis of the VAT legislation, HMRC guidance notes and relevant case law, that our client’s services were VAT exempt.

The outcome

Our client was able to move forward with certainty on how VAT applied to its business.

Non-VAT registered Providers

HMRC targeting VAT exempt businesses

Intro

Our client provided financial intermediary services to high-net-worth individuals

The Issue

Our client treated his income as VAT exempt and therefore not VAT registered even thoughtheir annual turnover was over £500k.

HMRC had made enquiries into his business, having cross-referenced his turnover from other tax enquiries that had been made, including questioning the rationale for VAT exemption.

How we Solved it

We conducted a review of our client’s services, assessing their value to ensure they did not qualify for VAT exemption, meaning they were taxable, we also had to ensure they did not exceed the VAT registration threshold.

The outcome

We satisfied HMRC that there was no liability to register for VAT.

Specialists In Intermediary Services

Sale of finance leads

Intro

We have acted for a client who provides ‘leads’ to loan brokers

Issue

Revenue from supplying leads is typically a % of successful leads if VAT is due on the commissions. It’s the lead provider who usually gets stuck with the VAT cost (because the brokers cannot typically recover the VAT they pay on their costs, so usually agree on a flat %, no VAT.)

How we solved it

We reviewed our clients’ activities and referred to a number of key VAT Tribunal cases that laid out the conditions that need to be met for a financial intermediary to qualify for VAT exemption.  

The Outcome

From here we advised our client that although on balance there was a strong argument that their services were VAT exempt, there were steps that they should take ( particularlyconcerning the lead evaluation process) to strengthen the argument for VAT exemption.

VAT &
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Online Trading

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Travel Services

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HMRC
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VAT &
Financial Services

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VAT on
M&A Transactions

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