In Wilmslow Financial Services plc (in administration) v HMRC [2020] UKFTT 516 (TC) (5 June 2020) the FTT decided that a structure designed to avoid irrecoverable VAT being suffered on advertising services for a loan broking business failed to achieve its desired effect.
The detailed arrangements in the case were complex and the periods in dispute date back as far as the year 2000. However in essence the appellant argued that supplies of loan broking services (which would be exempt when made in the UK) were made by a Gibraltar entity (Karakus) and that UK media advertising services in respect of the loan broking business were also received by this Gibraltar entity. The VAT effect of this characterisation of the supply position was that the advertising services would be supplied VAT-free to Karakus and no irrecoverable VAT cost would arise.
HMRC rejected this reasoning. Instead it argued...
