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HMRC internal manual

VAT Finance Manual

From
HM Revenue & Customs
Updated
, see all updates

Scope of the guidance

VAT manuals such as VATFIN are the main reference material on VAT for people in HM Revenue and Customs (‘HMRC‘). HMRC’s formal procedures and work systems are outlined in these manuals: they give managers and staff the Department’s rules and guidelines and general advice on interpreting them.

The guidance is aimed at HMRC staff and should not be relied on by businesses in calculating their taxes and/or duties.

The purpose of VATFIN is to provide you with the necessary background, information and guidance to enable you to determine whether a supply is treated for VAT purposes as a supply of financial services, and whether that supply then falls to be exempt or taxable.

The aim of this guidance is to assist you to make decisions by enabling you to identify:

  • the relevant EU and UK law;
  • any relevant legal tests and precedents;
  • any relevant case law;
  • the facts it may be necessary for you to establish;
  • current policy; and
  • any agreements with trade organisations.

This guidance should be read in conjunction with VAT Notice 701/49 Finance. The sections contained within this guidance expand some of the information contained within the notice, but there are also items within the notice that are not dealt with here because the supplies and liabilities are straightforward.

This guidance covers the following broad headings:

* money and related services see VATFIN2000
   
* securities for money and related services see VATFIN2800
* operation of any current, savings or deposit account see VATFIN2900
* credit and related services see VATFIN3100
* debts and related services see VATFIN3200
* securities and related services see VATFIN4000
* fund management and related services see VATFIN5000
* financial derivatives see VATFIN6000
* intermediaries see VATFIN7000
* Islamic products. see VATFIN8000

Separate guidance is provided on:

| * Gold | VGOLD and
VAT Notice 701/21
  | || | * Investment gold coins | VAT Notice 701/21A |

To obtain full benefit of this guidance you will need a broad understanding of the basic principles of VAT. Guidance on the basic principles of VAT is contained in the following HMRC guidance books:

  • VATSC - Supply and consideration
  • VATPOSG - Place of supply of goods
  • VATPOSS - Place of supply of services
  • VTAXPER - Taxable person
  • V1-6 - Business/non-business.

In addition you will need to be familiar with the following:

  • V1-13 - Input Tax and
  • PE - Partial Exemption.