In DPAS Limited v HMRC [2016] UKUT 0373 the Upper Tribunal (UT) referred questions to the European Court of Justice (CJEU) regarding the VAT exemption for services relating to payments and transfers.

  • The taxpayer company provides dental plan services directly to patients of dentists.
  • These services including taking payments from them by way of direct debit.
  • The VAT Directive provides an exemption for “transactions, including negotiation, concerning deposit and current accounts, payments, transfers, debts, cheques and other negotiable instruments, but excluding debt collection”

The First Tier Tribunal (FTT) originally decided that the taxpayer fell into this exemption as their services were transactions concerning payments or transfers.  HMRC appealed this decision on several grounds, most of which were covered in an earlier decision of the Upper Tribunal.

However, the Upper Tribunal did not address two points in their earlier decision:

  • Whether the company’s supply of services fell within the exemption.
  • Whether they were ‘debt collection’ and therefore excluded.

Instead they decided to wait until the CJEU gave their decision in Bookit Ltd v HMRC (C-607/14) and HMRC v National Exhibition Centre Ltd (C-130/15).  These cases concerned whether card handling services qualified for the exemption, and it was thought that one of them may help answer the above.

In May 2016 the CJEU released their decision, concluding in both cases that the processing of payment by debit or credit card was not an exempt transaction.

In the current case, the UT struggled to reconcile these decisions with the earlier CJEU decision in AXA UK plc v HMRC (C-175/09).  This concluded that similar dental plan services were transactions concerning payments but excluded from exemption as they were debt collection.

The UT therefore decided to refer the two questions to the CJEU, expressing the opinion that the CJEU could resolve them in one of two ways:

  1. They could say why AXA is determinative and explain why Bookit / National Exhibition Centre apply only to credit / debit cards and not direct debits; or
  2. They could say that the reasoning in Bookit / National Exhibition Centre applies equally to card and direct debit payments and the present case can be distinguished from AXA as the service is provided to the patient and not the dentist.

HMRC and the taxpayer were requested to formulate the exact questions to be referred.


Given the recent Brexit vote and the slow movement of the CJEU it is interesting to see that cases are still being referred to Europe.  

All parties involved will have to keep their fingers crossed that a decision can be reached before we leave the EU.  Quite what will happen in these cases once we are out remains to be seen.


Case reference: DPAS Limited v HMRC [2016] UKUT 0373