HMRC internal manual

VAT Finance Manual

VATFIN2110 - Money (including transfer of money) and related services: the legal provisions

Article 135.1 (d) and (e) of the Principal VAT Directive exempt:

(d) transactions, including negotiation, concerning … payments, transfers … cheques and other negotiable instruments …

(e) transactions, including negotiation, concerning currency, bank notes and coins used as legal tender, with the exception of collectors’ items: ‘collectors’ items‘ shall be taken to mean gold, silver or other metal coins or bank notes which are not normally used as legal tender or coins of numismatic interest

This EU legislation has been enacted into UK law as the VAT Act 1994, Schedule 9, Group 5, item 1, which exempts:

1. The issue, transfer or receipt of, or any dealing with, money, any security for money or any note or order for the payment of money.

Notes (1), (1A) and (2) to Group 5, state:

1. Item 1 does not include anything included in item 6.

1A. Item 1 does not include a supply of services, which is preparatory to the carrying out of a transaction falling within that item.

2. This Group does not include the supply of a coin or a banknote as a collectors’ piece or as an investment article.

In certain circumstances the above exemption is overridden by Schedule 8, Group 11, item 1, which zero-rates:

The issue by a bank of a note payable to the bearer on demand.

This is looked at further at VATFIN2250.