JP Morgan Chase loses Upper Chamber VAT appeal over single v multiple intra VAT group supplies
The Upper Tax Tribunal has dismissed on 16 June 2025 an appeal by JP Morgan Chase Bank NA, confirming HMRC’s position on the VAT liability of intra-group services within a UK VAT group: that services of support services provided by a member of a VAT group to another member is a single, composite taxable supply; and that the VAT financial exemption did not apply to the supplies in question. JP Morgan had argued unsuccessfully that some of the supplies, if examined separately, were entitled to the exemption.
This appeal followed the September 2023 First Tier Tribunal case that had backed HMRC’s view.
At the heart of the dispute was the tax treatment of services provided by JP Morgan Chase Bank, a US-based entity, to JP Morgan Securities plc, a UK-incorporated company. Both are part of the same VAT group in the UK, which typically means that supplies between them are disregarded for VAT purposes. However, this case centered on a key exception: bought-in services from outside the group that are then used to supply services to a UK member of the group that is partly exempt.
A further appeal to the Court of Appeal is now likely as JP Morgan may feel the court’s reading of the exemption was too narrow.
VAT liabilities on bought-in services for VAT group
Under normal VAT rules, transactions between companies within the same VAT group are ignored for VAT purposes. However, a UK anti-avoidance rule targets cases where:
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An overseas VAT group member (such as JP Morgan Chase Bank) purchases external services;
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And then supplies those services to a UK VAT group member (like JP Morgan Securities) that is partly exempt from VAT.
Such services do not qualify for VAT exemption if they do not fall within a specific list of VAT-exempt services, such as financial services.
In this case, HMRC determined that VAT should apply to the full value of the services provided by JP Morgan Chase to JP Morgan Securities. The tax authority argued that the US parent company was not merely managing internal operations, but was effectively resupplying external services it had acquired, making the transaction subject to VAT.
JP Morgan’s exemption argument rejected
JP Morgan Chase Bank contested HMRC’s position, arguing that it had not made a single supply of services to its UK affiliate under the terms of the global master services agreement. Instead, it sought to characterize the arrangement in a way that would preserve the intra-group VAT exemption.
The Upper Tribunal judges rejected this argument, siding with HMRC. The Tribunal confirmed that the services in question originated from third-party suppliers and were being resupplied to a UK member of the VAT group, making them subject to UK VAT under the relevant rules.
UK law supremacy despite post-Brexit EU shadow
This case draws significant interest because it underscores how UK VAT law continues to apply strictly, even post-Brexit, especially in complex international corporate structures. The Upper Tribunal’s ruling reinforces HMRC’s ability to disregard VAT grouping protections in cases where those rules are used to circumvent the VAT liability on bought-in services.
The case also serves as a warning to multinational corporations using similar service-sharing arrangements. It highlights that UK courts are willing to look beyond contractual structures and assess the economic reality of intra-group supplies.
In short, the Tribunal’s decision clarifies that VAT cannot be avoided simply by routing services through group structures when the services originate from outside the group and are delivered to partly exempt UK entities.
See more in our UK VAT Guide.
