This European Court of Justice (ECJ) decision has prompted HM Revenue & Customs (HMRC) to release Revenue & Customs Brief 54/10
AXA UK Plc is a representative member of a VAT group which included Denplan Ltd, a company that operates dental payments plans that allow patients to pay for dental treatment. Denplan Ltd collected payments directly from patients and then passed these over to the dentists net of fees and expenses. The dispute is whether the service provided by Denplan Ltd within the VAT exemption in Article 135(1)(d) of the EU VAT Directive. The exemption includes:
‘transactions, including negotiations, concerning deposit and current accounts, payments, transfers, debts, cheques and other negotiable instruments but excluding debt collection and factoring’
The ECJ decided that the services provided by Denplan Ltd were included within the exemption, however as the excluded item. This was the twist to the normally narrow decisions provided by the ECJ as the question was not asked in the UK courts.
The services provided by Denplan Ltd were decided to be subject to VAT. HMRC has commented on the case in brief 54/10 and state that the guidance from that date of the brief (12 January) and will apply even where a 'business has previously received a ruling from HMRC that those services fall within the VAT exemption (or it has previously been treating its services as exempt in line with HMRC’s published policy in this area)'