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Mortgage Administration Services- 20 November 2002

Mr. Curry: To ask the Chancellor of the Exchequer

(1) whether all suppliers of mortgage administration services in the UK are subject to VAT; whether joint venture companies between UK mortgage lenders and US service providers have been granted exemptions from VAT; and if he will make a statement; [80484]

(2) which member states of the EU impose VAT on outsourced mortgage administration services; and at what rates. [80485]

John Healey: Mortgage administration services are VAT exempt when supplied by the mortgage provider but are liable to VAT when provided by a third party. Supplies between two companies in a joint venture will be disregarded for VAT purposes if the companies are part of the same VAT group. Customs and Excise are currently taking action to prevent artificial structures involving joint ventures being used to bring third party companies within VAT groups. Little information is available on the VAT treatment of outsourced mortgage administration services in other member states, although the French advise that they would also charge VAT on outsourced loan administration services.

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David Curry MP | House of Commons, London SW1A 0AA | tel: 020 7219 6202