Beta This part of GOV.UK is being rebuilt – find out what beta means

HMRC internal manual

VAT Finance Manual

Credit, debts and related services: debts and related services: purpose of VATFIN3200

Businesses can raise finance by selling any amounts owing to them (their debts). The business is therefore relieved of the debt and of the collection of any monies outstanding under that debt.

These sections deal with:

This section will assist you in understanding what is meant by the above terms and deciding the liability of these supplies. In each case it is important to identify:

  • what is being supplied
  • the consideration for the supply and
  • the direction of the supply or supplies.

Topics not covered in these sections

The following topics are only covered in VAT Notice 701/49 Finance. You should read the relevant paragraphs for guidance on liability:

  • factoring and partial exemption (paragraph 5.6)
  • factoring and bad debt relief (paragraph 5.7)
  • factoring and cash accounting (paragraph 5.8).