If you want to research what actually happens in certain walks of life, VAT tribunal reports are a treasure trove. We learn about the purpose and activities behind pilates (Hocking [2014] UKFTT 1034), belly dancing (Cheruvier [2014] UKFTT 7), fortune telling (Indian Palmist (2003) VAT Decision 18397), and several more.
To this, and the others, we can add matchmaking services, brought to us by the case of Gray & Farrar International LLP [2019] UKFTT 684.
That’s a grand sounding name, but, in reality, one person is responsible for providing the service, namely Claire Sweetingham, assisted by a small team. So, what kind of person is she and what is the service?
For some readers, there will already be an image of such a person, in the form of Patti Stanger of the US reality show Millionaire matchmaker. Her show depicts her meeting wealthy individuals, and using her intuition to seek out a worthwhile match, while coaching her clients, and then monitoring their performance after the match is made. It all makes for great TV, but you can see how it could work away from the camera’s gaze. Now, at the risk of a writ coming in my direction, it seems that Sweetingham provides the same kind of service, but without the TV cameras and in the UK. But you can read the case report, and judge for yourself.
Fascinating on its own terms, no doubt; but, what’s the VAT point here? It is to do with the place of supply. The UK is a small pool for such customers, and the appellant attracted clients from outside the EU also. The issue is whether the place of supply of this service is in the UK, or can be regarded as ‘exported’ (though technically supplied where the customer belongs) and thus outside the scope of UK VAT. The latter can only arise if the service fits into the list in VATA 1994 Sch 4A para 16. The only candidate in this list is (d): services of consultants or/and provision of information.
HMRC said that these services were not amongst the ‘liberal professions’ (meaning a recognised category of expert), but the tribunal rejected that limitation on defining consultancy. HMRC then argued that the service went beyond consultancy as it involved making arrangements for something, and not purely giving advice, that Sweetingham could not physically have provided the majority of the input, and that her team was doing a large amount of work which could not credibly be called consultancy. Indeed, a cloud over this hearing was the extent to which HMRC relied on perceived inaccuracies in the appellant’s description of her working practices to make its case that she could not be acting as a consultant.
Among the several other points advanced by HMRC was that, as the appellant used her ‘inexplicable magic of intuition’ to make the matches, this did not amount to ‘advising’, as it lacked an intellectual component. This ‘argument’ comes across as clumsy and judgmental, and lacking (on its own part) much intellect. This impression is compounded by HMRC’s assertion that the service is little different to what would be provided ‘by a concerned friend’.
But I must now put you out of your misery. Was the service ‘consultancy’ with an overlay of ‘providing information’ (in which case it could be ‘exported’ to the non-EU client), or was it something else, and thus subject to UK VAT?
Perhaps Sweetingham should have worked her magic spell on the two tribunal members, who flatly differed on the point. The lay member thought that the appellant’s advice was core and central to the offering and that this had to be ‘consultancy’. The chairman was convinced by the argument that Sweetingham could not have performed the key role and that her team did a great deal, and this would not be ‘consultancy’ in pure terms. It is correct to say that the definition needs strictly to be applied for the relief from UK taxation to be allowed, and he said that the service was too multifarious to be ‘consultancy’, so the export treatment could not apply. He had the casting vote, so the appeal was rejected.
It is a decision that I would like to see appealed. There was no finding of quackery, charlatanry, or anything of that kind. There was no basis that this was mere ‘entertainment’. There may well have been quite a bit of ‘process’ beyond and around the core element provided by Sweetingham’s experience and intuition. Perhaps so, but I believe that the customer wanted, and received, a strong element of advice, the result of which was to form a successful relationship, and that seems to me to be the bedrock of the service.
If you want to research what actually happens in certain walks of life, VAT tribunal reports are a treasure trove. We learn about the purpose and activities behind pilates (Hocking [2014] UKFTT 1034), belly dancing (Cheruvier [2014] UKFTT 7), fortune telling (Indian Palmist (2003) VAT Decision 18397), and several more.
To this, and the others, we can add matchmaking services, brought to us by the case of Gray & Farrar International LLP [2019] UKFTT 684.
That’s a grand sounding name, but, in reality, one person is responsible for providing the service, namely Claire Sweetingham, assisted by a small team. So, what kind of person is she and what is the service?
For some readers, there will already be an image of such a person, in the form of Patti Stanger of the US reality show Millionaire matchmaker. Her show depicts her meeting wealthy individuals, and using her intuition to seek out a worthwhile match, while coaching her clients, and then monitoring their performance after the match is made. It all makes for great TV, but you can see how it could work away from the camera’s gaze. Now, at the risk of a writ coming in my direction, it seems that Sweetingham provides the same kind of service, but without the TV cameras and in the UK. But you can read the case report, and judge for yourself.
Fascinating on its own terms, no doubt; but, what’s the VAT point here? It is to do with the place of supply. The UK is a small pool for such customers, and the appellant attracted clients from outside the EU also. The issue is whether the place of supply of this service is in the UK, or can be regarded as ‘exported’ (though technically supplied where the customer belongs) and thus outside the scope of UK VAT. The latter can only arise if the service fits into the list in VATA 1994 Sch 4A para 16. The only candidate in this list is (d): services of consultants or/and provision of information.
HMRC said that these services were not amongst the ‘liberal professions’ (meaning a recognised category of expert), but the tribunal rejected that limitation on defining consultancy. HMRC then argued that the service went beyond consultancy as it involved making arrangements for something, and not purely giving advice, that Sweetingham could not physically have provided the majority of the input, and that her team was doing a large amount of work which could not credibly be called consultancy. Indeed, a cloud over this hearing was the extent to which HMRC relied on perceived inaccuracies in the appellant’s description of her working practices to make its case that she could not be acting as a consultant.
Among the several other points advanced by HMRC was that, as the appellant used her ‘inexplicable magic of intuition’ to make the matches, this did not amount to ‘advising’, as it lacked an intellectual component. This ‘argument’ comes across as clumsy and judgmental, and lacking (on its own part) much intellect. This impression is compounded by HMRC’s assertion that the service is little different to what would be provided ‘by a concerned friend’.
But I must now put you out of your misery. Was the service ‘consultancy’ with an overlay of ‘providing information’ (in which case it could be ‘exported’ to the non-EU client), or was it something else, and thus subject to UK VAT?
Perhaps Sweetingham should have worked her magic spell on the two tribunal members, who flatly differed on the point. The lay member thought that the appellant’s advice was core and central to the offering and that this had to be ‘consultancy’. The chairman was convinced by the argument that Sweetingham could not have performed the key role and that her team did a great deal, and this would not be ‘consultancy’ in pure terms. It is correct to say that the definition needs strictly to be applied for the relief from UK taxation to be allowed, and he said that the service was too multifarious to be ‘consultancy’, so the export treatment could not apply. He had the casting vote, so the appeal was rejected.
It is a decision that I would like to see appealed. There was no finding of quackery, charlatanry, or anything of that kind. There was no basis that this was mere ‘entertainment’. There may well have been quite a bit of ‘process’ beyond and around the core element provided by Sweetingham’s experience and intuition. Perhaps so, but I believe that the customer wanted, and received, a strong element of advice, the result of which was to form a successful relationship, and that seems to me to be the bedrock of the service.
