This was an appeal from the Court of Appeal on whether outsourced loan administration services supplied by the appellant were standard-rated supplies for VAT purposes, or if they fell under the financial services exemption. 

Shawbrook was in the business of making new loans to customers. As with many challenger banks, it did not develop a large in-house infrastructure required to manage the loans, but outsourced this business process, in its entirety, to the appellant. The appellant would, for example, set up direct debits, calculate payments due, process payments and deal with defaults, acting as undisclosed agent for Shawbrook. However, the appellant only managed the loans after they had been granted by Shawbrook without being involved in the loan origination. 

In May 2015, they sought a non-statutory clearance from HMRC concerning its VAT liability in respect of these services, contending that they are exempt from VAT. HMRC responded with