I’m about to embark on a lead generation campaign looking for people to consolidate there debts using debt management or an IVA. I have been told by some people that these services are VAT exempt and by others that there not.

I wouldn’t be supplying the service my self I would just be looking for customers to refer to the DM/IVA companies taking commission on-route.

Some clarity would be helpful.

Thanks
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To be VAT exempt, the service offering must be one of financial services/transactions. The legislation is quite lengthy and specific but I'll try to consolidate the logic.

To be a financial service - provision of insurance, loans, similar financial packages have to be offered directly to the customer. Services such as performing credit reference checks, transferring of monies between accounts and offering tailored advice are all considered financial services and are therefore exempt.

Many agents earn their income from leads and receive a commission from the bank/insurer, etc. If the service YOU provide fits in with the descriptions above then your income/commission is exempt.

If all you do for your 10% is obtain a name/details and then pass these onto the bank/insurer as a hot lead then you are not making any financial type services at all, you are just simply referring customers on. In effect, you are a glorified telesales person/salesman (no offence meant, just want to make sure we understand the difference between providing financial services and working in the financial services sector).

So be very clear what you do. If you are a referrer then you are taxable, if you are assisting in the whole process then you are exempt. Many agents will process credit checks on behalf of the bank so that the bank know they've got a very hot lead. Other agents will invite the customer to their offices and help them complete the application forms with the client - this is all exempt.

If you just send forms off in the post and then pass them on to bank, then this is a referral again and taxable.

It is very confusing area of VAT this, primarily becasue bank/insurers are generally VAT exempt and so try to avoid charging it or being charged it - but don't take their word on what the VAT rate should be as you are liable.

Best place to start is look at your contract with your banks/insurers and it'll go some way in explaining what YOU DO for your money and this should then clarify the VAT rate.
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