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£247,407 VAT Appeal Allowed Following Assessment

£247,407 VAT Appeal Allowed Following Assessment

A company recently appealed to the First Tier Tribunal against VAT assessments totalling £247,407, which it considered to be overpaid.

The business operates two websites - financial-advisors-near-me.co.uk and pension-advisers-near-me.co.uk - that collect user data from individuals seeking financial advice. This data is passed on to the company’s independent financial advisor (IFA) clients. Where a deal is concluded between the IFA and the prospective client, the company receives a percentage of the income generated from that introduction.

The company had accounted for VAT on the income generated from the leads. However, it later took the view that it was providing an exempt service linked to financial intermediary activities and did not account for VAT on these supplies.

HMRC disagreed, determining that the company’s services did not qualify as exempt supplies. HMRC’s position was that the company had not demonstrated that all leads passed to IFAs would result in the supply of an exempt financial product. In addition, HMRC considered that the level of data collected by the company was insufficient to constitute work preparatory to the conclusion of contracts.

The tribunal found that the company’s websites brought leads and clients together to facilitate access to financial advice. This process relied on prospective clients completing a questionnaire about their requirements, after which the system matched them with an IFA the company regarded as suitable.

The tribunal concluded that the company was doing enough to be treated as acting as a financial intermediary by introducing potential clients to IFAs supplying financial services. As a result, the company’s VAT appeal was allowed.

This case highlights the complexities involved in determining whether financial intermediaries are making an exempt supply for VAT purposes. If you would like to discuss how The VAT People can help you confirm the VAT treatment of your services, please contact our free helpline on 0161 477 6600.