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HMRC internal manual

VAT Finance Manual

Intermediaries: work relating to the operation of a current, deposit or savings account

The VAT Act 1994, Schedule 9, Group 5, item 5, and the relevant notes, does not cover the situation where someone is acting as an intermediary for the purposes of a supply falling within item 8, but this does not mean that the exemption does not apply. Under Article 135(1) (d) of the VAT directive transactions, including negotiation, concerning deposit and current accounts are exempt. If a business meets the criteria set out in VATFIN2950 then its service will be exempt.

As with other sub-contracted services, a bank or building society may outsource their savings business to an independent supplier who, for example, can accept deposits, issue statements, cheque-books etc on behalf of the bank. If the sub-contractor meets the criteria set out in VATFIN2950 then its service will be exempt.

ATM operators

In order for a retailer to qualify as an intermediary under item 5 in relation to ATM transactions, he must bring together the persons who are or may be seeking to receive financial services e.g. the person withdrawing money from the ATM machine, and the persons who provide financial services e.g. a bank or the LINK member. The retailer must also perform work preparatory to the conclusion of contracts. The retailer must clearly provide a negotiation or intermediary service to in order to gain the exemption. It is very unlikely that the retailer would make supplies which would fall within the exemption at Item 5.

In general therefore the convenience fee paid to the LINK member by the card holder is exempt but any amounts paid by the LINK member and/or machine owner to other parties, for example independent machine owners, franchisees, retailers, site owners etc are likely to be in respect of taxable supplies. This applies whether or not the site owner owns the ATM or stocks it with his own cash (see VATFIN2630).

If you have questions concerning ATMs not covered in this section please contact the Financial & Commodities VAT UoE.