The following Tax guidance note provides comprehensive and up to date legal information covering:
VAT is a key concern for businesses in the financial sector as the supply of certain types of financial services to customers belonging in the UK are exempt from UK VAT. This is important because:
businesses will not charge VAT on services falling within the exemption, and
such businesses will not be able to recover input VAT on supplies they receive in the course of making an onward exempt supply
The UK VAT exemption for financial services is based on the relevant provisions of Directive 2006/112/EC (the VAT Directive). These have been enacted into UK law by Schedule 9, Part II, group 5 to the Value Added Tax Act 1994 (VATA 1994), which sets out a number of items falling within the exemption.
This Practice Note focuses on the exemption for dealing with securities (VATA 1994, Sch 9, Part II, group 5, item 6) and the exemption for underwriting (VATA 1994, Sch 9, Part II, group 5, item 5A).
The issue, transfer or receipt of, or any dealing with:
any security, or
is exempt from VAT. This exemption is referred to as the 'dealing with securities exemption' throughout this Practice Note.
The provision of intermediary services in relation to
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