Key Facts
- •JPMorgan Chase Bank, NA (CBNA) appeals against VAT assessments issued by HMRC.
- •CBNA and JPMorgan Securities plc (SPLC) are in the same VAT group.
- •CBNA buys services from overseas to provide intra-group supplies to SPLC.
- •HMRC contends that intra-group supplies are taxable under s 43(2A) and (2B) VATA.
- •The appeal concerns whether CBNA makes single or multiple supplies to SPLC and if exempt or standard-rated.
- •CBNA provides Support Services (HR, Real Estate, Legal) and Business Delivery Services (QR, Technology, Operations, Market Risk) to SPLC.
- •CBNA argues that Business Delivery Services are exempt under Articles 135(1)(d) and/or (f) of the Principal VAT Directive.
- •HMRC contends that no supplies fall within the financial services exemptions.
- •The Global Master Services Agreement (GMSA) governs inter-company services within the JPMorgan group.
- •The GMSA was revised several times, with the 2019 version clarifying service descriptions.
Legal Principles
Burden of proof lies on the appellant.
Grunwick Processing Laboratories Ltd v Commissioner of Customs and Excise [1987] STC 357
Each supply is normally distinct and independent, unless elements are so closely linked they form a single indivisible economic supply (Levob) or one is principal and others ancillary (CPP).
Honourable Society of Middle Temple v HMRC [2013] STC 1998; Spectrum Community Health CIC v HMRC [2022] UKFTT 237 (TC); Frenetikexito – Unipessoal Lda v Autoridade Tributária e Aduaneira (Case C-581/19)
When determining the nature of a transaction for VAT purposes, the court must look at the economic purpose of the transaction, starting with the parties' agreement. The court only goes behind the contract if it doesn't reflect the true agreement.
ING Intermediate Holdings Ltd v HMRC [2018] STC 339; HMRC v Airtours Holidays Transport Ltd [2016] STC 1509
Financial services exemptions are to be interpreted strictly and determined by the nature of services, not the supplier or receiver. Actual execution of a financial transaction is necessary for exemption, not merely giving instructions.
Target Group Limited v HMRC [2021] STC 1662; Sparekassernes Datacenter v Skatteministeriet [1997] STC 932
Classification of a supply cannot depend on the use of goods or services supplied.
BlackRock Investment Management (UK) Ltd v HMRC [2020] STC 1445
Sections 43(1)(a), 43(2A), and 43(2B) VATA govern the treatment of intra-group supplies.
Value Added Tax Act 1994
Article 135 of the Principal VAT Directive details exemptions for financial transactions.
Council Directive 2006/112/EC
Schedule 9, Group 5 of VATA specifies exempt financial supplies.
Value Added Tax Act 1994
Outcomes
Appeal dismissed.
CBNA makes a single taxable supply to SPLC, not multiple supplies. The services provided are so closely linked that it would be artificial to split them. None of the individual elements qualify for the financial services exemption.