Deeks VAT News Issue 63

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Welcome to this Issue of Deeks VAT Newsletter    

July 2025 issue 63 

Keeping you up to date on VAT changes            

In this month’s newsletter we cover the following: 

JPMorgan Chase Bank N.A. v HMRC 

Conservatory Insulations Northwest Ltd v HMRC 

RCB 3 (2025): VAT treatment of income received from charity fundraising events 

HMRC Updates Online Marketplace VAT Guidance   

VAT Complexities in Event Ticketing: The Photo Booklet Dilemma  

Unlock the Power of Your Pension: SSAS for SME Directors 

Latest from the Courts

JPMorgan Chase VAT Case: Financial Support Services Ruled as Single Standard-Rated Supply 

The Upper Tribunal has delivered a significant ruling in JPMorgan Chase Bank N.A. v HMRC, confirming that complex financial support services constitute a single standard-rated supply rather than multiple supplies with potential exemptions. This decision has far-reaching implications for financial services businesses and their VAT treatment of intercompany arrangements. 

Background 

The case involved JPMorgan Chase Bank N.A. (CBNA) providing “support services” and “business delivery services” to JPMorgan Securities plc (SPLC), both part of the global JPMorgan group. HMRC raised assessments asserting these services formed a single standard-rated composite supply. Crucially, whilst intra-group supplies are normally disregarded under VAT legislation, HMRC argued these were taxable under s43(2A) VATA94 because CBNA purchased overseas services to enable the intra-group supplies. 

The Central Issue: Single vs Multiple Supply 

The fundamental question was whether CBNA made one supply or multiple separate supplies. This distinction is critical because: 

• Certain financial services may qualify for exemption 

• The characterisation affects the entire VAT liability 

Upper Tribunal’s Analysis 

The UT dismissed all six grounds of appeal, establishing several key principles: 

1. Contractual Starting Point The UT confirmed that contracts are the correct starting point for VAT analysis. The Global Master Services Agreement (GMSA) was found to provide for undifferentiated services, supporting a single supply conclusion. Importantly, the UT ruled that separate invoicing isn’t determinative – multiple supplies can appear on one invoice, and conversely, one supply can be split across multiple invoices. 

2. The Levob Test Application The UT applied the established Levob test, examining: 

• Indivisibility: Whether elements merge into a distinct new supply 

• Indispensability: Whether the transaction has a single economic aim 

• Close links: Whether elements are so closely connected they form one economic supply 

• Separate availability: Whether typical consumers can obtain elements elsewhere 

The UT found all elements pointed to a single supply with the economic aim of enabling SPLC to carry on business in a regulatorily compliant way. 

3. Restrictive Exemption Interpretation Perhaps most significantly for the financial services sector, the UT applied a restrictive interpretation of financial services exemptions. Following the Supreme Court’s approach in Target, the UT ruled that to qualify for exemption, services must actually alter the legal and financial position between parties – merely facilitating, supporting, or making transactions inevitable is insufficient. 

Key Implications for Financial Services 

1. Single Supply Presumption Where services are provided under framework agreements without clear differentiation, HMRC is likely to argue for single supply treatment. This could affect how financial institutions structure their service offerings and pricing. 

2. Exemption Challenges The restrictive exemption interpretation means many support services previously considered exempt may now be standard-rated. Services such as: 

• Clearing and settlement support 

• Trading infrastructure provision 

• Risk management tools 

• Operational support functions 

3. Intercompany Arrangements The ruling emphasises the importance of properly documenting intercompany arrangements. Whilst contracts cannot determine VAT treatment, they remain the analytical starting point. 

Practical Steps for Businesses 

Financial services businesses should: 

• Review existing intercompany agreements and service descriptions 

• Assess whether support services genuinely alter legal relationships 

• Consider restructuring arrangements to support multiple supply arguments where appropriate 

• Gather evidence of separate market values for different service elements 

• Ensure clear separate pricing where multiple supplies are intended 

Looking Forward 

This decision represents a significant victory for HMRC’s approach to complex financial services. The restrictive exemption interpretation aligns with European precedent but may prompt further appeals given the substantial sums involved. 

The ruling serves as a reminder that VAT analysis must focus on the substance of what is being supplied, not just contractual descriptions. For financial services businesses, the message is clear: exemptions will be interpreted narrowly, and comprehensive documentation is essential to support any multiple supply arguments. 

Conservatory Insulations Northwest Ltd v HMRC  

HMRC Assessment Time Limits: When Counter-Signatures Matter 

The First-tier Tribunal has delivered an important ruling in Conservatory Insulations Northwest Ltd v HMRC, finding that a VAT assessment was invalid because it was made outside statutory time limits. The decision clarifies when an assessment is legally “made” and highlights the critical importance of HMRC’s internal procedures in determining validity. 

Background Facts 

The case arose from a seemingly straightforward error correction notice (ECN) that became complicated by HMRC’s internal processes: 

• CINL filed an ECN on 15 July 2022 for multiple VAT periods 

• HMRC acknowledged receipt but subsequently lost or misfiled the ECN 

• CINL’s agent resubmitted the ECN on 22 May 2023 

• HMRC Officer Maddison completed the assessment form (V642) on 27 June 2023 

• Due to a penalty inhibit, the assessment required counter-signature 

• Officer Errington counter-signed on 18 July 2023 

• The assessment was notified to CINL on 22 July 2023 

The Critical Legal Issue 

The dispute centred on when the assessment was legally “made” – a crucial determination given the statutory time limits under sections 73 and 77 of VATA 1994. Under these provisions, assessments must generally be made within the later of: 

• 2 years after the end of the prescribed accounting period, or 

• 1 year after evidence of facts comes to HMRC’s knowledge 

HMRC argued the assessment was made on 27 June 2023 (when Officer Maddison completed the form), whilst CINL contended it wasn’t made until counter-signed on 18 July 2023 or notified on 22 July 2023. 

The Tribunal’s Analysis 

The FTT established important principles about when assessments are “made”: 

1. Standard vs Counter-Signature Required 

• For most assessments, no counter-signature is needed, and the assessment is made when the assessing officer completes the form 

• Where HMRC’s internal guidance requires counter-signature or authorisation, the assessment is only made after the second officer acts 

• The requirement for counter-signature depends on HMRC’s own internal procedures 

2. Burden of Proof The FTT emphasised that HMRC bears the burden of proving assessments are made within time. This proved significant as HMRC failed to provide witness statements, forcing the judge to make findings of fact from documentary evidence alone. 

3. Internal Guidance Significance The FTT relied heavily on HMRC’s internal guidance (VAEC8820), particularly the requirement for counter-signature when penalty inhibits are involved. The tribunal found that Officer Maddison followed this guidance, requiring authorisation from another officer. 

The Decision 

The FTT concluded that: 

• A counter-signature was required due to the penalty inhibit 

• The assessment was therefore not made until Officer Errington counter-signed on 18 July 2023 

• This was more than one year after the ECN submission 

• Consequently, the assessment was invalid as it exceeded statutory time limits 

Key Implications for Taxpayers 

1. Time Limit Challenges This decision provides a clear framework for challenging assessments on time limit grounds. Taxpayers should: 

• Scrutinise assessment dates carefully 

• Investigate whether counter-signatures were required 

• Challenge assessments where timing appears questionable 

2. HMRC’s Internal Procedures Matter The ruling demonstrates that HMRC’s own internal guidance can determine legal validity. Understanding these procedures becomes crucial for effective challenge strategies. 

3. Evidence Requirements HMRC’s failure to provide witness statements proved costly. This highlights the importance of proper evidence gathering in assessment disputes. 

Strategic Considerations 

1. Legitimate Expectation Arguments The judgment references the Upper Tribunal decision in Henryk Zeman, noting that taxpayers could argue legitimate expectation based on HMRC’s published guidance about notification dates. This provides an additional avenue for challenge. 

2. Notification vs Making Whilst HMRC’s guidance suggests they use notification dates for time limit purposes, the legal test focuses on when assessments are “made.” This distinction can be crucial in borderline cases. 

3. Penalty Inhibit Implications The case reveals complexity in HMRC’s assessment processes, particularly around penalty inhibits. This procedural complexity may explain increased errors in recent penalty and interest regimes. 

Practical Steps for Advisers 

When reviewing assessments, advisers should: 

• Identify the assessment date and any counter-signature requirements 

• Calculate time limits from relevant trigger events 

• Request disclosure of internal HMRC processes where timing is disputed 

• Consider both “making” and “notification” dates in time limit analysis 

• Prepare witness evidence to support factual positions 

Broader Context 

This decision reflects growing judicial scrutiny of HMRC’s administrative processes. The FTT’s willingness to examine internal guidance and procedures provides taxpayers with additional tools for challenging assessments. 

The case also highlights resource pressures within HMRC, evidenced by the lost ECN and complex internal procedures. These factors may create opportunities for successful challenges where proper procedures haven’t been followed. 

Looking Forward 

The decision establishes important precedent about assessment validity and HMRC’s internal procedures. It’s likely to encourage more challenges to assessment timing, particularly where counter-signatures are involved. 

For HMRC, the ruling emphasises the need for proper evidence in assessment disputes and highlights how internal guidance can create legal obligations. 

Expert Commentary 

This case demonstrates the importance of technical precision in VAT assessment procedures. Whilst the underlying tax may be correct, procedural failures can invalidate assessments entirely. The decision reinforces that taxpayers have strong rights regarding assessment timing and that HMRC must follow their own procedures meticulously. 

The ruling provides a valuable template for challenging assessments on procedural grounds and highlights the continuing importance of proper case preparation and evidence gathering in tax disputes. 

HMRC UPDATES 

HMRC Clarifies VAT Exemption for Charity Fundraising Events 

HMRC has issued Revenue and Customs Brief 3 (2025) clarifying the VAT treatment of charity fundraising events following the Upper Tribunal’s decision in Yorkshire Agricultural Society. 

Key VAT Exemption Requirements 

VAT exemption applies to goods and services supplied by charities or qualifying bodies at events where: 

• The primary purpose is fundraising 

• The event is promoted as being primarily for raising money 

Upper Tribunal Findings 

The UT made several important clarifications: 

• Events can have more than one primary purpose 

• Where multiple purposes cannot be separated in importance, VAT exemption can still apply 

• UK law’s requirement for events to be “promoted primarily” for fundraising was incompatible with EU law 

• Under the Marleasing principle, the word “primarily” should be deleted from promotional requirements 

HMRC’s Updated Position 

Despite the UT ruling, HMRC maintains that: 

• The primary purpose must still be fundraising 

• Events must be advertised as fundraising events 

• “Objective documentary evidence” is required to demonstrate fundraising purpose 

Evidence Requirements 

Charities claiming multiple primary purposes must provide: 

• Evidence supporting the fundraising purpose 

• Explanation of why purposes cannot be separated by importance 

• Documentation showing the event was organised as a fundraising event 

Practical Impact 

This guidance provides clarity for charities organising events with mixed purposes. However, HMRC’s continued emphasis on promotional requirements suggests they may not fully embrace the UT’s interpretation of EU law compatibility. 

HMRC will update their guidance on charity fundraising event exemptions to reflect these changes. 

HMRC Updates Online Marketplace VAT Guidance 

HMRC has refreshed its guidance on VAT obligations for online marketplace transactions, introducing new procedures for verifying seller establishment and clarifying liability rules. 

New Guidance Released 

The updated guidance includes a new section on “Check where an online marketplace seller is established,” providing detailed procedures for: 

• Verification checks marketplace operators should perform 

• Processes to establish seller location and VAT status 

• Documentation requirements for establishment evidence 

Updated Guidance Areas 

HMRC has also revised existing guidance covering: 

• Charging VAT when using online marketplaces to sell to UK customers 

• VAT obligations for online marketplace operators 

• Direct sales VAT requirements for UK customers 

Why This Matters 

Online marketplace operators (OMPs) face joint and several liability for VAT not declared by sellers on their platforms. This means if a seller fails to account for VAT properly, the marketplace operator can be held liable for the unpaid tax. 

Practical Steps for Marketplace Operators 

The new guidance provides welcome clarity on: 

• What checks to perform on sellers 

• How to request proof of establishment 

• Documentation standards for compliance 

• Risk mitigation procedures 

Action Required 

Marketplace operators should: 

• Review current seller verification processes 

• Align procedures with the new HMRC guidance 

• Implement enhanced due diligence checks 

• Update terms and conditions for sellers 

Expert Commentary 

This guidance update reflects HMRC’s continued focus on online marketplace compliance. The joint and several liability provisions make robust seller verification essential for marketplace operators. The new establishment checking procedures provide a clearer framework for compliance, reducing the risk of unexpected VAT liabilities. 

Marketplace operators who haven’t already implemented comprehensive seller verification should treat this as a priority, given the potential financial exposure from non-compliant sellers. 

VAT Articles

VAT Complexities in Event Ticketing: The Photo Booklet Dilemma 

Event organisers bundling admission tickets with commemorative photo booklets face a crucial VAT question: is this one supply or two? The answer dramatically affects your VAT liability.  

Whilst event admission is standard-rated at 20%, photo booklets may qualify for zero-rating – but only if they meet strict criteria and aren’t considered “ancillary” to the main event. HMRC often treats bundled items as a single standard-rated supply, especially when booklets can’t be purchased separately. The safest approach?  

Offer clear separate pricing or treat the entire bundle as standard-rated to eliminate VAT risk. 

Read our full analysis on navigating these tricky VAT waters HERE 

Unlock the Power of Your Pension: SSAS for SME Directors 

Discover how a Small Self-Administered Scheme (SSAS) pension can transform your business strategy. Unlike traditional pensions, SSAS offers SME directors unprecedented flexibility – borrow up to 50% of your pension value for working capital, purchase commercial property tax-efficiently, and reduce corporation tax with contributions up to £60,000 per director. You can also invest in traditional markets and consolidate old pensions into one powerful, controllable pot. It’s not just retirement planning – it’s a strategic business tool that puts you in control. 

📖 Read our complete guide to How SME Directors Are Using SSAS to Grow Their Business and Save Tax for detailed guidance on all scenarios, compliance requirements, and best practice recommendations.  

Need specialist SSAS guidance? Contact Jane Deeks at Deeks VAT Consultancy for professional advice across all industries.  

jane@deeksvat.co.uk | 07710553831 | LinkedIn