TaxPersonal TaxTaxman loses six-year VAT battle

Taxman loses six-year VAT battle

Customs & Excise has lost the last stage of a six-year legal fight after a decision which will save the banking industry millions of pounds every year in outsourcing costs.

The House of Lords this week denied Customs leave to appeal a decision which allowed an outsourcing company, First Data Europe, to charge for its services without VAT.

Customs had contended that the company’s services, which largely involve processing credit card transactions, were subject to VAT. The case has progressed through the courts since the mid-1990s ending in a Court of Appeal ruling in favour of First Data, previously known as FDR.

The decision will save First Data’s clients tens of millions of pounds in VAT every year, and could encourage banks to outsource more of their services because it has removed an extra cost.

Peter Jenkins, a partner at Ernst & Young, which represented the company, said: ‘This is vindication of the company’s stand in what has been a six-year struggle.’

He added: ‘This puts egg on the face of Customs officials and is an embarrassment for Treasury ministers returning after the election.’

A Customs spokesman described the decision as disappointing and said it would work with the trade on implementing it.

However, he warned that it was likely there would be more litigation in this area.

Links

Click here to read more on this story.

Related Articles

LITRG urges government to consider tax changes in disability work plan

Administration LITRG urges government to consider tax changes in disability work plan

4d Lucy Skoulding, Reporter
HMRC appeal rejected in Tottenham Hotspur case

Administration HMRC appeal rejected in Tottenham Hotspur case

2w Emma Smith, Managing Editor
HMRC urged to clarify impact of income allowances on Self-Assessments

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

2m Alia Shoaib, Reporter
New trading allowance: simplicity, but not as we know it

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

2m Emma Rawson, ATT Technical Officer
Wealthy individuals could circumvent top tax rate rises

Personal Tax Wealthy individuals could circumvent top tax rate rises

4m Alia Shoaib, Reporter
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

4m 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

5m Alia Shoaib, Reporter
Does the Taylor Review sufficiently address the gig economy?

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

5m Alia Shoaib, Reporter