Liability of services provided by a dental payment plan

DPAS offered dental payment plans. After the Court of Justice of the EU (CJEU) decision in CRC v AXA UK plc (C-175/09) [2010] STC 2825 it restructured its supplies so that there was a contract with the dentist that was subject to VAT and an exempt payment handling contract with the patients.

HMRC disagreed that the services to patients were exempt. The First-tier Tribunal allowed the taxpayer’s appeal but the Upper Tribunal referred the matter to the CJEU.

The CJEU ruled that the exemption did not apply to a supply of services whereby the taxpayer in effect issued instructions to the patient’s bank to transfer money. This was an administrative service and did not involve the taxpayer itself effecting the transfer.

The court accepted that the service was essential to making the payments owed by the patients to their dentists and insurers. But it said ‘since Article 135(1)(d) of the VAT...