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HMRC internal manual

VAT Finance Manual

Money (including transfer of money) and related services: interpreting item 1: what is meant by ‘dealing with’

It is important to note that the law refers to dealing ‘with’ and not dealing ‘in’ money. In the case of Williams & Glyn’s Bank Ltd (Tribunal decision 118) - see VATFIN2410 - the tribunal noted that these words, in the context of the purpose of Group 5, *‘… require the relevant services to have sufficient of the characteristics of a financial transaction or operation so as to be capable of being fairly so described.’ *A financial institution does not, for example ‘deal in’ guarantees.

Therefore, you need to distinguish between money (and other financial instruments) being dealt ‘in’ as physical goods (for example, a numismatic dealer or a security company stocking up ATMs) and money being dealt ‘with’ as a service (for example, a bank’s over-the-counter foreign exchange service). The latter naturally falls within the exemption as financial in nature.

To deal with money as required under item 1, the business supplying the services will act as a principal, as in the foreign exchange example above. (Foreign exchange is further discussed in VATFIN2700).