The First-tier Tribunal (FTT) has released its decision in Ocean Finance, concerning the application of abuse of law principles to advertising costs incurred by an offshore loan broking business.
In 2013 the CJEU held that it was conceivable that a structure which provided loan broking to UK lenders from Jersey, and which procured UK TV advertising in a VAT-efficient manner, was an abuse of law. The Court of Appeal (in 2018) interpreted this as meaning that abuse was considered relatively improbable, but it remitted the matter to the FTT for determination.
The FTT has now ruled that Ocean Finance’s structure was not an abuse of law, confirming the conclusion that it had originally reached in 2010. The loan broker in Jersey outsourced its loan application processing functions to Ocean Finance in the UK, but the way that the structure had been implemented and operated satisfied all of the concerns that had been raised by the Upper Tribunal and Court of Appeal.
The decision is further confirmation of the importance of a clear and coherent contractual and operational structure, if a VAT benefit is likely to result and is one of the principal motivations behind how a business has been set up.
Gary Campbell and Judith Lesar will be considering the decision and its implications in a webinar at 11am on Wednesday 23 September.