“Matchmaker, matchmaker, make me a match” - Cautionary VAT tale (Subtitled: Not Quite Love Actually)

Fans of the musical “Fiddler of the Roof” will no doubt be humming along as they read these lines – but for the appellant in a recent VAT case, the finding of the First Tier Tribunal did little to help them create harmony in their tax relationships with HMRC this year.

The appellant – Guy and Farrar International LLP (G&F) provide exclusive matchmaking services who those looking for love across the globe, therefore they had clients in lots of different countries.

Finding the right match – now is that an art or a science?

Does it matter when hope springs eternal in the hunt for your one true love – well it does to HMRC. Finding the right VAT treatment to apply to their charges to their clients is where things started to get sticky for G&F.

When you look at the nature of the services being supplied by G&F the argument before the Tribunal was whether or not they were the supply of “consultancy services” - which if they were - then where they were supplied to clients outside of the EU no VAT needed to be charged. However, if they fell short of the description of: “the services of consultants, engineers, consultancy firms, lawyers, accountants and other similar services, as well as data processing and the provision of information”, which is contained within the Principal VAT Directive, Article 59(c), para c, and the UK VAT Act, Sch 4A, para 16(2)(d), then VAT should have been charged.

Stripped of any romance the legal arguments dissected the nature of a “consultancy service” with HMRC’s position being that matchmaking is not consultancy but equally it was more than “data processing and the provision of information”.

With two members sitting to hear the case – final proof that finding one’s true love is often not a smooth path – the one member - a Mrs Wilkins - had the view that the service from G&F consisted of the provision of information (on the suitability of potential matches) and expert advice (the role of confidante in supporting their client) however, the presiding member – a Mr Hellier – disagreed. He was “not persuaded” and felt the service went beyond the provision of information and expert advice but did not fall to be regarded as a consultancy service within the context of para c of the VAT legislation. As the presiding member of the Tribunal Mr Hellier’s view held sway and the appeal against the assessment from HMRC was dismissed.

Ah – t‘was ever thus. In the search for romance and the perfect life partner – reality and – of course – VAT steps in to play its hand. Whether it’s the question of the VAT treatment of a Jaffa Cake or the services of a matchmaker to “Look through your book” – now who can truly say that VAT’s not an INTERESTING Tax!

Merry Christmas and a Happy & Healthy 2020 to you all from the Centurion VAT team – the ones that find VAT interesting!!