In Target Group Ltd v HMRC [2021] ECWA Civ 1043 (12 July 2021) the Court of Appeal ruled that third-party loan servicing is liable to VAT and not within the exemption for financial services. In particular the services were not ‘transactions concerning payments or transfers’ and loan accounts were not current accounts.
The taxpayer (Target) provided loan servicing to Shawbrook Bank. Target provided services to Shawbrook once the loan had been arranged that included setting up a loan account facilitating payment with the borrower (including setting up the direct debit) processing other repayments made calculating the amount of interest due applying fees reconciling and crediting the payments to the loan accounts and closing the account once the loan had been repaid. Target was not involved in the provision of the initial loan or any further advances. Target considered that it made exempt supplies of...
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