Is a Matchmaking Agency Providing Consultancy Services for VAT Purposes?

High-end matchmaking agencies do far more than simply introduce lonely clients to prospective life partners. In a guideline case, however, the Court of Appeal has ruled that – at least for the purposes of VAT – their services are not equivalent to those of a consultancy firm providing expert advice.

The case concerned a matchmaking agency that prided itself on the quality of the service it provided to its clients, including the careful verification and vetting of potential matches and post-introduction liaison. Its entry-level clients paid £15,000 for eight introductions over a 12-month period and its most expensive custom and bespoke services cost between £25,000 and £140,000.

The agency contended that it was providing the 'services of consultants…and other similar services…and the provision of information' within the meaning of Article 59(c) of the Principal VAT Directive. On that basis, it argued that its provision of services to clients located outside the UK and the European Union fell outside the scope of VAT. HM Revenue and Customs took a contrary view and appealed after the agency's arguments prevailed before the Upper Tribunal.

In upholding the appeal, the Court noted that the agency's sole obligation identified in the express terms of its client contracts was to supply introductions. The provision of information was not expressed as a freestanding obligation and there was no mention of the provision of advice. There was no doubt that a typical consumer would regard the provision of introductions as the most important element of the agency's service. That was what its clients were bargaining for.

The additional services provided by the agency, although important, were not an end in themselves and none of them was referred to in its client contracts. The Court concluded that the service provided by the agency was not a service habitually supplied by consultants or consultancy firms giving expert advice to a client. Nor was its service either data processing or the supply of information.