Bloomsbury wins £250k tax refund claim appeal
Debate over balance of intermediary and advice services falls in favour of adviser.
HM Revenue & Customs has been ordered by the High Court to refund more than £250,000 of tax to an adviser firm who paid this in error, following an appeal by the firm.
In January 2010, Bloomsbury Wealth Management made a claim for repayment of £258,592.22 in output tax, which the company said it had paid in error between 1 October 2005 and 30 September 2009.
The company filed its claim based on the argument that the specific intermediary services provided at the time were actually not subject to VAT under the VAT Act 1994, and that the bulk of the company’s services were intermediary and not advice.
HMRC rejected the claim, arguing that the services provided by the company were not in fact exempt from VAT.
The VAT Act states that if the company acts between the customer and provider, its services could be exempt from that specific tax.
However, it adds: “If, on the other hand, your advice far outweighs the work done to arrange a contract, the intermediary service is ancillary to the advice, and VAT is due on the whole supply.”
In his decision, Tribunal judge Greg Sinfield wrote: “HMRC are wrong to regard Bloomsbury’s services as predominantly the introduction of clients to fund managers with a view to the clients receiving fund management services.
“On the evidence that we have seen, we consider that what the clients sought and what Bloomsbury provided was, initially, advice on the most appropriate investments for the client and, thereafter, implementation of that advice.”
HMRC has until the first week of August to appeal the decision.