The tax office fell decidedly out of love with a dating agency for the super-rich when it tried to reclaim £1.75 million in VAT.
Gray & Farrar, based in Mayfair, London, charges up to £140,000 a year to find some of the world’s richest people a perfect partner.
The agency said it did not have to pay VAT because non-EU clients of consultancies are taxed in the country where they live, rather than where the consultancy is. Since Brexit this applies to all non-UK clients. HM Revenue & Customs (HMRC) said a company could only be a consultancy if it provided “reasoned, evidence-based intellectual advice” but claimed that Gray & Farrar used intuition in meetings with clients, as well as “reading between the lines” and “studying body language”.
In November 2019 a first-tier tax tribunal found in the taxman’s favour. However, in a verdict published last week the decision was overruled at the upper tribunal and judges found that Gray & Farrar did not need to pay VAT on its services between 2012 and 2016.
The tribunal found that the dating advice fitted the description of “a combination of expert advice and information”. David Milne QC, who represented Gray & Farrar, said: “Most basic dating agencies use algorithms on computers, but Gray & Farrar are a case apart.
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“They provide an exclusive service, holding face-to-face interviews, sometimes flying out to South Africa or wherever clients are. That is why it is said that they are a consultancy.”
Most Gray & Farrar clients pay a minimum annual fee of £15,000 plus VAT, which entitles them to eight introductions from a pool of 2,000 members. However, about 300 clients pay up to £140,000 for a bespoke service, where the agency’s experts scour the globe for the perfect partner.
Sarah Halsted from the tax adviser RSM said the ruling could encourage companies that provide advice to categorise themselves as consultancies for tax purposes. “HMRC has been told that its narrow definition of consultancy is wrong,” she said.
HMRC said it was “carefully considering the decision of the upper tribunal”. Gray & Farrar’s founding director Claire Sweetingham declined to comment.
