The recent Court of Appeal case – Gray and Farrar International LLP [2023] EWCA Civ 121 considered whether an elite dating agency’s services were similar to consultancy services or the provision of data analysis and information…
G&F provided a bespoke dating agency service. Positioning itself as a high end matchmaking service, the business owners eschewed the practices of many of the more well known internet dating sites in favour of a more tailored personal service. Typically, G&F would meet and interview a client, build a profile of that client’s likes, dislikes, character etc. and then effect an agreed number of introductions to other persons on its ‘books’.
G&F’s premium service offered to introduce clients to individuals from a wider network of contacts often based on geographical preferences not simply other clients seeking a match.
Subscribers could pay up to £140,000 for the bespoke service.
The appellant contended that its services fell within article 59(c) of EC VAT Directive 2006/112/EC reproduced below:-
the services of consultants, engineers, consultancy firms, lawyers, accountants and other similar services, as well as data processing and the provision of information
In short, if G&F’s services fell within this definition its supplies to non-EU customers (B2C) would be outside the scope of VAT.*
If the services could not be characterised as consultancy, data analysis and/or the provision of information they would be standard-rated UK supplies.
The Upper Tier Tribunal had earlier found for the appellant on the basis that there was a single supply, the predominant element of which was advice provided as part of the matchmaking service combined with information relating to potential matches.
The Court of Appeal disagreed:
the service provided by G&F was not a service habitually supplied by consultants or consultancy firms giving expert advice to a client. What it did was different. Nor was the service either data processing or the supply of information.
This judgment highlights a problem for businesses supplying ‘intangible’ services to individuals in other countries. There is a temptation to try to ‘shoehorn’ all manner of services into one of the categories listed in article 59. In many instances such a treatment will not be challenged. This judgment suggests however that such an approach is incorrect.
Perhaps G&F’s services could have been better categorised as ‘advertising services’ (art. 59 (b)).
* Note that the period at issue here predates Brexit. Today any supplies within article 59 made to individuals outside the UK would also be outside the scope of UK VAT .
