United Kingdom: Tribunal confirms VAT exemption for intermediary lead generation services
The United Kingdom First-Tier Tax Tribunal issued a decision in Case No. TC09543, providing important clarification on the VAT exemption applicable to intermediary services.
Case background:
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The case involved an online service provider that offered lead generation services, connecting prospective clients with independent financial advisers (IFAs).
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The provider charged a fee for each successful referral and claimed that these services were exempt from VAT as intermediary services.
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HM Revenue and Customs (HMRC) rejected the VAT refund request, asserting the services were subject to VAT.
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The taxpayer appealed the decision to the First-Tier Tax Tribunal.
Tribunal findings:
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Lead generation services qualified as intermediary services:
The Tribunal found that the taxpayer’s role went beyond general advertising or promotion. Instead, the service was specific and transactional, acting as a direct link between potential clients and IFAs. -
Taxpayer not merely providing promotional services:
The Tribunal ruled the taxpayer was not acting as a mere conduit or marketer. The nature of the lead generation activity met the requirements for intermediary status, as it facilitated the formation of financial service contracts.
As a result, the Tribunal concluded that the services qualified for VAT exemption under the relevant UK VAT rules.
Implications:
The ruling provides further clarity on the distinction between advertising services, which are taxable, and intermediary services, which may be VAT-exempt, particularly in the context of financial services referrals.
Source: gov.uk
