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VAT: Match not made in heaven

A first tier tribunal panel disagreed about whether dating services should be subject to VAT after the taxpayer claimed that her expert relationship advice constituted consultancy work.

It is an accepted fact that most business-to-consumer (B2C) services provided by a UK business are subject to VAT (if standard rated) because the general rule for B2C services is that it is all about where the supplier is based.

There are a number of exceptions to this rule, and one is that a range of services escape VAT if the customer is based outside the EU. In this case, the place of supply then depends on where the customer is based. The list of services that fall within this category is included in VAT Notice 741A, section 12. The relevant UK legislation is VATA1994, Sch 4A, para 16(2).

The case

In the FTT case of Gray & Farrar International LLP (TC07457), the issue was whether the exclusive matchmaking services supplied to non-EU customers (all B2C) qualified as outside the scope of UK VAT under the legislation above.

The aim of the service was for a customer to be matched with a long-term partner and the taxpayer argued that the exclusive service provided by G&F included both information and expert advice and therefore qualified under Sch 4A para 16(2)(d):

“services of consultants, engineers, consultancy bureaux, lawyers, accountants and similar services, data processing and provision of information…”

The relevant words in this case are underlined.

Two options

A client could take up two different options with G&F:

Club Service 

This would guarantee at least eight introductions to potential partners in a 12-month period but only utilising people from the G&F database. The cost of this service was £15,000 plus VAT.

A lot of work was carried out by G&F to interview clients about their needs and personality, and to identify suitable partners. There was often a need to guide clients in the right direction and to manage their expectations.

Custom and Bespoke Service

This search process extended beyond G&F’s client base to find the eight introductions. The cost of this service varied between £25,000 and £140,000 plus VAT.

Nature of services

The driving force behind the business was Claire Sweetingham. The taxpayer argued that she gave “expert advice” based on a “high level of experience” in the dating industry. This advice continued after two potential partners had met, with the comment being that “counselling was part of the facilitating of a match becoming a happy long-term relationship.”

HMRC argued that the “advice supplied was no more than could have been given by a concerned friend” and was “common sense, not specialist or expert” (in other words, not consultancy). HMRC also highlighted that a lot of the work was carried out by supporting staff, who were not experts in the industry

The decision

To show how difficult VAT can be in some cases, the decision was tied. Judge Wilkins concluded that the supply related to information and expert advice and therefore fell within Sch 4A para 16(2)(d). However, the tribunal chairman Judge Hellier disagreed and his casting vote decided the case. The appeal was therefore dismissed.

Judge Hellier felt that the role of the support staff could not be dismissed as insignificant and they were not providing either expertise or information, ie the services fell outside of Sch 4A para16(2)(d).

Learning points

The challenge in such cases is to be aware that some services are not subject to UK VAT if supplied to a B2C customer who is based outside the EU. For example, if you complete a UK tax return for an American resident, then your fee will not be subject to VAT, as the place of supply is America.

The other important point is to understand that HMRC might challenge a taxpayer’s view about whether a service offers enough expertise to be categorised as ‘consultancy’. The case report defined consultancy as “giving of advice based on a high degree of expertise”. This could be a useful guide in other potential grey areas. When does a person become an expert in their field rather than, say, a specialist?



Having worked with Matthew and the rest of the LHP team for several years now, I find them very approachable and they explain things in an easy way. Great for tax advice and would highly recommend them. Brilliant for apps too!
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