The UT has released its decision in the dispute between Target Group Limited and HMRC, holding that the financial services exemption for VAT did not apply to loan administration services provided by the appellant to banks. The supplies were therefore standard rated. The UT agreed with the FtT that the supplies did not fall within Item 8 of Group 5 of Schedule 9 to VATA 1994 (operation of accounts). Whereas the FtT had decided that the appellant’s supplies were excluded from Item 1 because they amounted to debt collection, the UT held that the supplies were not within the definition of “transactions… concerning… payments, transfers, debts” in the first place. The UT followed the CJEU’s decsion in DPAS Ltd (Case C-5/17). It also considered the CJEU’s recent judgment in Cardpoint (Case C-42/18).
The case is particularly important in the context of outsourcing and payment handling in the financial services sector. Businesses and their advisers will need to review it carefully.
Hui Ling McCarthy QC appeared for the successful Respondent.