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HMRC internal manual

VAT Finance Manual

HM Revenue & Customs
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Securities and related services: listing fees charged by regulatory bodies and stock exchanges

The EU Directive on the admission of securities to official stock exchange listings (which consolidates and replaces earlier Directives) requires that any company that wishes to float on a national stock market must be listed with a competent national authority. Prior to 1 May 2000, when the Official Listing of Securities (Change of Competent Authority) Regulations 2000 came into effect, the UK competent national authority was the London Stock Exchange, but on that date this role was transferred to the Financial Services Authority (‘FSA’).

The Financial Services and Markets Act 2000 (FSMA) states that listing rules may require the payment of fees to the competent authority in respect of:

  • applications for listing
  • the continued inclusion of securities in the official list
  • applications for approval as a sponsor and
  • continued inclusion of sponsors in the list of sponsors.

FSMA also states that the FSA may determine the amount to be set for the listing.

Prior to the 1 January 2004 the listing fee charged by the FSA was treated as being taxable at the standard rate of VAT. The fee was also seen as falling within the VAT Act 1994, Schedule 5, and thus the place of supply was where the recipient belonged. Following a review of the FSA listing fee, which was undertaken after the House of Lords decision in the case of Institute of Chartered Accountants in England and Wales ([1999] STC 398), it was decided that, with effect from 1 January 2004, the correct VAT treatment of the fee should be that it is non-business, and thus no VAT is due.

Fees charged by financial institutions, such as the London Stock Exchange, for admission to join those institutions remain taxable at the standard-rate. The place of supply treatment is where the recipient belongs under the VAT Act 1994, section 7A (2).