The Upper Tax Tribunal (UTT) recently dismissed JP Morgan Chase Bank N.A.'s appeal in a significant UK VAT case concerning intra-group supplies.

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Case Details

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JP Morgan Chase Bank N.A. (CBNA) provided services to JP Morgan Securities plc (SPLC), both part of the same UK VAT group. These services were governed by a Global Master Services Agreement (GMSA) / contract and comprised of two main elements namely 

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• Business Delivery Services: Trading infrastructure for SPLC’s Markets business.

• Support Services: Legal, tax, HR, IT, and other corporate functions

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The case which was first heard in the FTT and dismissed, centred around JP Morgan Chase Bank (CBNA) supplying services to JP Morgan Securities PLC under an inter-company services contract and whether these formed a single supply of taxable services or separate  supplies of taxable support services and exempt business delivery services to the trading / securities business segment (SPLC).

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Under normal circumstances, intra-group supplies within a VAT group are disregarded. However, CBNA had purchased services from outside the UK to deliver these intra-group services, triggering VAT implications under sections 43(2A) and (2B) of the UK VAT Act.

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HMRC argued that:

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• CBNA was effectively resupplying external services, not just managing internal operations.

• The services constituted a single taxable supply, not multiple exempt supplies

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UTT Decision

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The Upper Tribunal upheld HMRC’s position on the basis that:

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• The services were a single standard-rated supply for VAT purposes.

• Even if some components might qualify for exemption (e.g., under the securities exemption), the overall supply was taxable.

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This ruling will have implications for companies that use inter-group contracts for the basis of supplying bought in services internally and emphasises the need to ensure contacts are worded appropriately to reflect the economic reality of inter-group transactions. 

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Please see link to UTT decision.

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JPMORGAN CHASE BANK N.A. v THE COMMISSIONERS ...

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