Finance Flashcards
What is the significance of the Bookit/NEC cases?
Card handling services not exempt from VAT where they are additional charges invoiced by the provider of services for the ability to pay by a certain payment method, per Everything Everywhere case.
HMRC accepted that where an agent making supplies of goods and services, makes a supply over and above the actual goods and services, and the charge is separately identifiable, it is exempt.
In this case it did not constitute consideration for a supply that is distinct and independent from the principal supply of services for which the payment is made.
Describe the Bookit/NEC cases
Both claimed refunds of VAT which they considered had been overpaid to HMRC in relation to the supply of card handling services.
They claimed the fee charged was exempt from VAT as a transaction concerning payments.
The card handling fees were held to be taxable as the transactions were not specific or an essential function of the transfer of money between bank accounts, they simply confirmed the transaction had been received.
What is the significance of the Kretztechnic case?
The case concerned the recovery of VAT on professional fees relation to the issue of shares
Input tax incurred in relation to the issue of shares is residual as share issues are not a supply for VAT purposes
Must prove that the funds raised from the issue of shares is used for taxable purposes
The first issue of securities (e.g. shares, bond, loan notes, debentures), by a company is not a supply for VAT purposes.
What is the case of Axa Denplan?
The service of a payment plan administrator for payments between dental customers and dentists was not an exempt supply of payment or transfer services, but rather standard rated administrative services
The services amounted to no more than administrative services which, whilst necessary for the payments to take place, did not effect the legal and financial changes which characterised an exempt transfer or payment
What is the case of DPAS?
DPAS restructured its arrangement following the Axa Denplan decision to provide services on behalf of dental patients rather than to dentists
It contended its services for patients, for which it charged a plan fee, qualified as exempt provision of transactions concerning payments
ECJ held that the services of the dental plan administrator of requesting, receiving and passing on payments and did not fall into the exemption
Describe the case of ATP Pension Services [2020]
HMRC accepted that pension funds could be special investment funds provided they meet certain characteristics
The CJEU considered whether defined contribution pension funds could be a SIF and decided that unlike a defined benefit scheme, the employees pension benefits are determined by the performance of the assets and the employee bears the risk rather than the employer
It was held to be a SIF
What is the significance of ATP Pension services [2020]?
Following the decision, it is now accepted that pension funds that have all of the following characteristics are SIFs for the purposes of the fund management exemption and the services of administering and managing those funds is exempt
Characteristics
- Solely funded by the person to whom the retirement benefit is paid (i.e. pension customers)
- The pension customer bears the risk
- The fund contains the pooled contributions of several pension customers
Describe the case of Wheels Common Investment Fund Trustees [2013]
The CJEU held that defined benefit occupational schemes were not SIFs
The court decided that they are not collective investment schemes as they are not available to the public
Members of the schemes (employees) do not bear the risks arising from the performance of the assets but rather the benefits are defined by reference to salary and length of service on retirement
Employers bear some risk but only in the sense of complying with their legal obligations
Supplies of investment management services to defined pension schemes were standard rated for VAT
What was the finding in Finanzamt Trier v Cardpoint GmbH?
The service of operating ATMs on behalf of a bank were not within item 1 group 5 schedule 9
Describe the case of CSC Financial Services
CSC supplied services to Sun Alliance which issued personal equity plans. It dealt with telephone enquires, sent applications to potential customers and checked completed application forms.
But the customers had already been approached by Sun Alliance and the parties were not brought together by CSC, who acted in an intermediary capacity but as a subcontractor for Sun Alliance in processing applications
The CJEU confirmed that CSC was not an intermediary because it was standing in the shoes of Sun Alliance whilst taking calls and also because its activities were clerical activities that would normally have been undertaken by Sun Alliance
What is the significance of the Target Group Ltd v HMRC [2021]
Reaffirms the position in Axa Denplan and DPAS
Loan administration services provided to a bank are not exempt transactions
Target Group was not involved in the making of any loans or further advances on loans but operated individual loan accounts and processed payments from borrowers
Describe the Abbey National [2006] case
A company was the corporate trustee of a collective investment scheme classified as a SIF and subcontracted the management of the money to fund managers who made supplies to it
The UK authorities ruled that this was ordinary investment management and not exempt
The CJEU ruled that the services were different from what these fund managers did for all their other clients, the services were essential for the management of the SIF and must themselves constitute the management of the SIF = exempt
What is the significance of the JP Morgan Fleming Claverhouse Investment Trust Plc [2008] case?
The CJEU held that if investment company trusts competed directly with open ended investment companies, they had to be treated the same for VAT, so they both were exempt
What is the significance of the Blackrock Investment management case?
The CJEU held that there was a single supply of taxable management services, when supplied to both exempt and taxable investment funds
It could not be split as it would be artificial and was a single composite service
What is the significance of the Deutsche Bank case?
DB provided discretionary portfolio management services to individual investors with consequential trading
The investors paid a single annual portfolio management fee which included a separately identified charge for the buying and selling of securities
The court decided that the circumstances where the two elements were part of a single service and were of equal weight, it was a taxable supply of portfolio management
Flat fees charged on an annual or periodic basis had no direct link to the transaction and were not exempt
