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Liability of supplies in the financial services sector—legislation

Under VATA 1994, Sch 9, Group 5, many supplies made in the UK relating to the financial sector are exempted from VAT. For an overview of the financial services exempted under UK legislation, see V4.136.

It is important to note that the VAT treatment of financial transactions is a contentious area of VAT legislation and it has been the subject of many court cases, especially in respect of services associated with financial transactions (as opposed to the financial transactions themselves) as these are usually not covered by the exemption.

Whilst many supplies made by businesses operating in the sectors will be covered by exemption, many will not. Some supplies will not be relieved by any part of the VAT legislation and will hence be standard-rated. Other supplies may be relieved by zero-rating provisions in VATA 1994, Sch 8 (which are described at V4.201–V4.290).

Liability of supplies in the financial services sector

The headings which follow examine