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VAT on Referral Fee by Estate Agent to Lender?

Estate Agent charges lender a referral fee for introducing them to a borrower. VAT treatment of fee?

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Hello all,

I am hoping some of the practice members may have experience of dealing with estate agencies and of the various types of fees they charge. My question is this:

An estate agency has worked with a small developer to introduce him to a lender that provides development finance. The EA will invoice the lender a referral fee for this introduction. What is the VAT treatment of this invoice in this situation? I am struggling to find any recent guidance on the matter or guidance in a similar situation.

Many thanks.

Weald Accountant

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By Les Howard
13th Jan 2017 16:52

The key HMRC Notice is 701/49, para 9.1.
The usual question in such instances is whether the introducer actually does any preparatory work. A mere introduction to a recommended provider is not sufficient for the exemption to apply.
https://www.gov.uk/government/publications/vat-notice-70149-finance/vat-...

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By shaun king
13th Jan 2017 17:22

It will be standard rated as the referral is just that and he has no active part in the fiance process as notice 701/549 will confirm.

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By Weald Accountant
14th Jan 2017 11:59

Thank you Les and Shaun, that clears it up for me. Thanks for the prompt responses as well.

All the best,

WA.

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