VATFIN2820 - Money (including transfer of money) and related services: securities for money, credit guarantees and related services: what is a security for money?
Securities for money were described by the tribunal in the case of Dyrham Park Country Club Ltd (LON/77/284) as a document under seal or under hand at a consideration containing a covenant, promise or undertaking to pay a sum of money. The tribunal found that the document did not need to be marketable, transferable or negotiable.
Securities for money, for the purposes of item 1, include such things as Euro currency paper, bills of exchange and promissory notes.
The decision in Kingfisher Plc (2000 STC 992) also established that the consideration for the redemption of a face value voucher for cash was exempt for the purposes of item 1 - security for money. The vouchers were issued on credit and the presentation of the vouchers to participating retailers established the voucher issuer’s obligation to pay the face value of the voucher. The result in Kingfisher was predicated on an analogy with the services supplied by credit card companies (Para 68 and 70 of the decision refers).
The word securities in this context, does not cover stocks, shares, bonds etc - these are covered in the exemption under the VAT Act 1994, Schedule 9, Group 5, item 6. Note (1) to Group 5 specifically excludes anything falling within item 6 from falling within item 1 (see VATFIN2110). Therefore a security which is not a security for money can only fall within item 6.