UT/2024/000002 - [2025] UKUT 00188 (TCC)

As regards the GMSA entered into in 2019, the FTT found that JPMorgan had been in ongoing discussions with HMRC about outsourcing since 2014, which expanded in 2017 to include issues central to the present appeal ([125]). It was acknowledged during this process that the 2006 GMSA did not adequately describe the intra-group services being supplied. Consequently, JPMorgan’s VAT Team, with input from other departments, worked to clarify these services and their VAT treatment. Simultaneously, JPMorgan was reviewing its outsourcing governance in response to evolving regulatory expectations, leading to a rapid decision-making process internally referred to as a “war room” in mid-2018 ([125]).

The FTT found that the outcome of this internal review was a decision to streamline the GMSA to avoid “the requirement (in a number of non-UK jurisdictions) of having a schedule for each outsourced activity and, in response to the VAT dispute which led to this appeal, the nature of the services should be clarified and better defined”. The VAT Team saw this as an opportunity to address the deficiencies in the 2006 GMSA by including “an appropriate” description of the services and “address the gap in the 2006 GMSA”. Mr Bradley led the drafting of this description, which underwent a firm-wide approval process, including sign-off by the CFOs of each business line and JPMC. However, VAT was only one of several factors influencing the 2019 restatement, and the VAT Team alone did not initiate the “war room” process ([126]).

Recital H to the 2019 GMSA explained:

“WHEREAS, certain Services are Business Delivery and Support Services (identified and described in Appendix C), each of which is a single economic supply provided by a single Affiliate, the compensation for which may be determined by reference to an amalgamation of multiple underlying Expense Products.”

Clause 1 (l) to the 2019 GMSA defined “Services”

“shall mean (i) the Business Delivery Services and Support Services identified in Appendix C that to the extent applicable, may be further defined by the detailed activities in an agreed upon taxonomy of component activities and captured in an online tool(s) or (ii) any other service set forth in any other documentation or tool(s) that details the activities being performed …”.

The introduction to Appendix C then stated:

“The Services identified in this Appendix shall consist of: (1) those essential for and specific to the Recipient’s business transactions (Business Delivery Services), and (2) all other Services (Support Services). Business Delivery Services are identified separately for each material JPMC line of business.”

The Appendix went on to describe in more detail the content of, respectively, Business Delivery Services and Support Services. Business Delivery Services were specified to consist of “Transaction Execution, Fund Administrative Management and Sales Relationship Management”. A more detailed description was then given of these services in respect of different businesses. For instance, the list for Corporate Investment Bank, the Markets and Capital Markets businesses included i) facilitation of trading through technology platforms, ii) transaction recording and settlement iii) collateral processing iv) initial client set-up / pre-trade checks v) otherwise enabling the processing management and execution of trades. The specification under “Support Services” set out a non-exhaustive list of services e.g. business technology, audit, human resources, legal and compliance services, real estate and security services, which were each accompanied by more detailed descriptions.

Appendix D contained specimen invoices which aligned with the Business Delivery and Support Services as described. The FTT explained these services were then on subsequent pages attributed to the individual business areas to which they related ([133]).

The FTT found that the amended and restated GMSA, which came into effect on 30 September 2019, included for the first time a contractual description of the inter-group services. Mr Bradley confirmed however that there was no substantive change in the nature, number, or underlying business of the services provided as a result of the restatement ([127]).