Irrecoverable VAT

23 August 2016

Issue: 4564 / Categories: Tax cases

ING Intermediate Holdings Ltd v CRC, Upper Tribunal (Tax and Chancery Chamber), 5 July 2016

Deductibility of input tax in connection with provision of deposit accounts

ING Direct’s business involved taking cash deposits from retail customers and using the funds raised mainly through the acquisition of bonds to make a profit. It did not charge a fee for the service.

A dispute arose with HMRC on the input tax incurred in connection with deposit taking.

The matter concerned whether the deposit taking activity involved a supply of services for consideration by ING or whether it was just the lending of money. The Upper Tribunal said it was clear from CRC v Newey (P) (trading as Ocean Finance) (Case C-653/11) [2013] STC 2432 and CRC v Secret Hotels2 Ltd [2014] STC 937 that the starting point should be the contractual terms. These were consistent with services provided to depositors as customers. Indeed the commercial reality was that the depositors were customers: as a matter of contract and...

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