DPAS: VAT exempt payment payment services revisited

Simmons & Simmons article for Tax Journal looks at the Advocate General’s opinion on the scope of the VAT exemption for transactions concerning payments or transfers in the context of payment administration services provided to a debtor.

This article was first published in the 13 April 2018 edition of Tax Journal who have agreed to Simmons & Simmons making it available on elexica.

Martin Shah and Gary Barnett’s article in Tax Journal looks at the recent Advocate General’s opinion in HMRC v DPAS (Case C-5/17), which raises two important issues. What is the correct approach in seeking to apply the exemption for transactions concerning payments or transfers? And what, if any, implications can be drawn from the fact that a taxpayer chooses to restructure transactions to avoid the adverse VAT consequences of an earlier decision of the courts? On the latter point, the Advocate General’s suggestion that the "economic reality" of the supplies was not altered by "playing around with wording of the contracts" may again encourage HMRC to challenge such restructurings.

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