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HBOS plc provides various financial services to customers, including credit card facilities, loans and overdrafts.
Where customers do not make payment in respect of those services, the bank uses agents to recover outstanding debts.
HMRC ruled that the supply made by the agents was a ‘single debt collection’. HBOS appealed.
The VAT tribunal agreed with HMRC, so the bank appealed to the Court of Session.
Dismissing the appeal, the Court of Session found that the tribunal was correct in saying that the service supplied by the agent was debt collection within the meaning of article 13B(d)(3) of the Sixth Directive.
The agent did not act as an intermediary. Rather it acted on behalf of and was answerable to HBOS as principal.
From the customer’s point of view, it stood in for the bank, and did not act as a go-between.
HBOS’s appeal was dismissed.
