TaxPersonal TaxVAT ruling saves credit card companies £100m

VAT ruling saves credit card companies £100m

The Court of Appeal has thrown out a Customs & Excise appeal in a decision which could save the financial services industry £100m in VAT payments.

A 1999 VAT Tribunal ruled that services provided by credit card processing company FDR were exempt from VAT after Customs ruled in 1995 that the tax was payable.

But in an embarrasing move for Customs, the Court of Appeal today upheld the Tribunal’s ruling saying FDR did not have to pay the tax.

Estimates indicate FDR alone could save £70m – a sum it risked having to pay to Customs if the decision had gone the other way.

Marc Welby, VAT partner at Ernst & Young, advisers to FDR, said: ‘We are delighted with the result.

‘It is tremendous news for our client FDR, and this decision will also be very welcome to those financial services businesses who outsource services relating to credit, loan and hire-purchase agreements.’

It is understood Customs will now have to review a finance order placed in the 1999 Budget which made the services laible to VAT.

Customs has indicated it is considering a further appeal to the House of Lords.

Customs’ chiefs to face probe

Related Articles

HMRC urged to clarify impact of income allowances on Self-Assessments

Personal Tax HMRC urged to clarify impact of income allowances on Self-Assessments

4d Alia Shoaib, Reporter
New trading allowance: simplicity, but not as we know it

Administration New trading allowance: simplicity, but not as we know it

1w Emma Rawson, ATT Technical Officer
Wealthy individuals could circumvent top tax rate rises

Personal Tax Wealthy individuals could circumvent top tax rate rises

2m Alia Shoaib, Reporter
HMRC tax evasion assistance requests double in five years

Corporate Tax HMRC tax evasion assistance requests double in five years

3m Emma Smith, Managing Editor
Rangers tax case to have ‘dramatic’ consequences for football and business

Legal Rangers tax case to have ‘dramatic’ consequences for football and business

3m Emma Smith, Managing Editor
Italy grants first successful non-dom status application to former UK non-dom

Personal Tax Italy grants first successful non-dom status application to former UK non-dom

2m Emma Smith, Managing Editor
Industry reaction: Taylor Review does not go far enough in addressing tax issues

Legal Industry reaction: Taylor Review does not go far enough in addressing tax issues

3m Alia Shoaib, Reporter
Does the Taylor Review sufficiently address the gig economy?

Corporate Tax Does the Taylor Review sufficiently address the gig economy?

3m Alia Shoaib, Reporter