8.2. Is a sales accounting service that is provided as part of a debt factoring arrangement an incidental financial supply?
Non-interpretative – straight application of the law
No. Regulation 40-5.10 provides that for a supply to be an incidental financial supply, the services in question must be provided by the same entity that supplies the interest that was input taxed. In a factoring arrangement, the (input taxed) interest in the debt is supplied by the assignor to the debt factor, whilst the accounting services are supplied by the debt factor to the assignor. Therefore, such supplies of sales accounting services are not incidental financial supplies.