Friendly Loans Limited v Her Majesty's Revenue & Customs

Decision date: 25 September 2009

Neutral citation: [2009] UKFTT 247 (TC)

Overall AI summary confidence: high

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Short overview

This short overview is intended to summarise the case, issues and outcome so far as they are supported by the judgment.

AI confidence in this short overview: high

Friendly Loans Limited, a loan broker, appealed HMRC's ruling that its transfers of customer details to group company Gregory Pennington were standard‑rated supplies of leads. The Tribunal found the Appellant acted as an intermediary that performed substantive screening, completed application work and steered customers into Gregory Pennington’s debt negotiation and payment‑handling contracts, so its supplies were sufficiently related to exempt financial services under Article 13B(d)(3)/group 5 and thus VAT‑exempt. The appeal was allowed and costs awarded against HMRC.

Ratio decidendi

This summary is intended to identify the ratio decidendi, meaning the legal reasons for deciding and the binding part of the decision.

AI confidence in this ratio decidendi summary: high

Where a supplier brings together a customer and a financial services provider and, beyond merely selling information, performs substantive tasks (screening, completing application forms) and has a real connection to the outcome (high take‑up by the referred customers), the supplier’s services may properly be characterised as intermediary negotiation/payment‑handling services related to an exempt financial transaction under Article 13B(d)(3) and group 5, so as to attract VAT exemption.

Obiter dicta

This summary is intended to identify obiter dicta, meaning observations made by the way that were not necessary to deciding the case and are not binding.

AI confidence in this obiter dicta summary: medium

The Tribunal observed that negotiation can be parsed into separate services and that being one intermediary in a chain does not by itself prevent exemption; similarly, the internal timing of a provider’s stages is less important than whether the overall potential contract includes exempt supplies.

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