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HMRC internal manual

VAT Finance Manual

Money (including transfer of money) and related services: operation of a current, deposit or savings account: provision of special cheques and special credit forms

The supply of chequebooks, credit slip books and bank statements is ancillary to the operation of an account and so exempt under item 8.

However, the supply of special cheques and special credit slip books, which were the subject of an appeal by National Westminster Bank PLC (‘Natwest’ - tribunal decision 17687), are a separate taxable supply of goods.

The appeal concerned whether the production of special cheques and special credit forms for its customers was a taxable supply of goods or ancillary to the exempt supply of the operation of an account. The tribunal found that the special cheques were supplied as a separate supply of goods and were not ancillary to the exempt supply of services made by the bank, because:

  • customers were looking for something over and above the ‘basic bill of exchange form’ which they could acquire from the bank
  • the special cheques were a means of advertising or publicity and it is this that the customers were buying when they ordered them
  • the special cheque books were ordered a la carte
  • customers could obtain their special cheque books elsewhere, i.e. not via the bank
  • the supply of special cheque books is in no way a necessary ingredient of the banking relationship or, specifically, cheque honouring functions of the bank
  • the amounts charged for special cheque books were significant and
  • they were invoiced separately.