HM Revenue & Customs has decided not to appeal a judgment that forced it to repay almost £260,000 in incorrectly charged VAT to an adviser.
Bloomsbury Wealth Management won its case after a two-year battle with HMRC. Partner Jason Butler applied to HMRC for repayment of VAT totalling £258,592 which Bloomsbury said it had accounted for in error between 1 October, 2005 and 30 September, 2009.
The firm had applied VAT on its advice services but said these should have been treated as exempt. HMRC rejected the claim in July 2010, which Bloomsbury appealed.
A tax tribunal heard the case on 4 May.
HMRC argued Bloomsbury was introducing clients to collective investment fund managers which it deemed to be a taxable service. It also submitted that advice and management formed the predominant supply.
Bloomsbury said advice was ancillary to introducing clients to fund managers.
In his judgment, published in June, tribunal judge Greg Sinfield said: “The evidence showed the focus of Bloomsbury’s services was the creation and maintenance of a portfolio of units for its clients which is an exempt supply of intermediary services.”
This week, HMRC confirmed it will not appeal.
A spokesman says: “Bloomsbury was merely acting as an IFA in the provision of advice leading to the intermediation of exempt financial products. As such, the VAT treatment as found by the tribunal is entirely consistent with that laid out in our current guidance.”
Bloomsbury Wealth Management partner Jason Butler says: “I am pleased to hear HMRC is not appealing. We can now put this behind us.”