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HMRC internal manual

VAT Finance Manual

Securities and related services: clearing and settlement services

Once trades have taken place there is a need to settle indebtedness between the parties. This service would include:

  • identifying payments for transactions
  • balancing accounts for the principals
  • notifying final liabilities to the parties for settlement purposes.

This list is not exhaustive.

This service may be exempt under item 5 as intermediary services in connection with transactions in securities. It might also be exempt under item 1. For more information on intermediary services and the criteria that need to be met to qualify as an intermediary see VATFIN7000 and paragraph 9.1 of VAT Notice 701/49 Finance.

SWIFT is a secure global financial messaging service used between financial institutions for interbank money and security transactions and is treated as taxable across the EU. This was confirmed by the ECJ in Nordea Pankki Suomi Oyj (C-350/10) which found that the exemption does not cover electronic messaging services which, whilst necessary for the financial transaction to take place, do not themselves create the necessary changes in the legal and financial positions of the parties.