VATFIN3112 | Credit, debts and related services: credit and related services: legal provisions

Article 135.1 (b) of the VAT directive exempts:

The granting and the negotiation of credit and the management of credit by the person granting it.

The above has been enacted into UK law as the VAT Act 1994, Schedule 9, Group 5, items 2, 2A, 3 and 4, which exempt:

2. The making of any advance or the granting of any credit.

2A. The management of credit by the person granting it.

3. The provision of the facility of instalment credit finance in a hire-purchase, conditional sale or credit sale agreement for which facility a separate charge is made and disclosed to the recipient of the supply if goods.

4. The provision of administrative arrangements and documentation and the transfer of title to the goods in connection with the supply described in item 3 if the total consideration therefore is specified in the agreement and does not exceed £10.

Notes (3) and (4) state:

3. Item 2 includes the supply of credit by a person, in connection with a supply of goods or services by him, for which a separate charge is made and disclosed to the recipient of the supply of goods or services.

4. This Group includes any supply by a person carrying on a credit card, charge card or similar payment card operation made in conjunction with that operation to a person who accepts the card used in the operation when presented to him in payment for goods or services.