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HM Revenue and Customs Brief 69/07


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Issued 19 November 2007

VAT: The decision of the tribunal in Services Ltd

This Revenue & Customs Brief concerns the VAT treatment of insurance introductory services following the VAT tribunal decision in Services Ltd (InsuranceWide). The tribunal found that certain internet services provided to insurers and brokers in connection with the arranging of insurance policies do not fall within the exemption for insurance related services provided by insurance brokers and agents and are liable to VAT at the standard rate.


InsuranceWide provides an online comparison website service, putting potential customers in touch with insurers via a click-through from its website to that of an insurer or insurance broker. It receives commission from the insurers based on the number of contracts that result from the introductions. Over the years, the services provided by InsuranceWide have changed as technology has developed.

In 2002 InsuranceWide introduced a system known as the InsuranceWide Wizard which automated the selection process by obtaining and recording the essential information required by insurers and applying that information to guide each prospective customer through to the most appropriate insurer or insurers. This information is discussed regularly with insurers to ensure it is kept up to date.

The Decision

The Tribunal found that none of the services provided by InsuranceWide fell within the VAT exemption because InsuranceWide was not an insurance agent. InsuranceWide specifically disclaimed being an agent on its website and was found to be playing no part in the negotiation of the contracts. Neither did InsuranceWide have the power to bind the insurance company which the tribunal found to be one of the indicators of an agency relationship (although not it itself determinative for VAT purposes).

Having found against the Appellant on this basis, the tribunal then went on to consider whether any of the services provided by InsuranceWide qualified as the 'services of an insurance intermediary' (under UK law) or insurance 'related services' (under EU law) which would have made them exempt had InsuranceWide been an insurance agent.

The tribunal found that, in performing the non-Wizard services, InsuranceWide’s role was not that of a mediator between the parties to a contract of insurance. It found that InsuranceWide was 'nothing more than an introducer and its role…..cannot be properly distinguished from that of an advertiser in that via its website it had no interaction with either party beyond making the one aware of the other and providing a means of one contacting the other.'

After the introduction of the Wizard, however, the tribunal found that InsuranceWide’s services went beyond that of a mere promoter of, and introducer to, insurance companies and would qualify for exemption under both UK and EU law when provided by an insurance agent or broker. In particular the tribunal highlighted the regular negotiations with insurers about the range and price of products, the saving of time for both the insurers and would be insureds by referring only suitable applicants to appropriate insurers and assisting with the completion of forms.

Implications of the decision

The decision in InsuranceWide confirms HMRC’s current published policy in this area (see in particular paragraph 10.5 of Notice 701/36, Insurance) and, as such, does not have implications for any of the insurance-related services that HMRC currently see as falling within the VAT exemption.

Whilst certain services provided via the internet were found to be liable to VAT, HMRC do not see the decision as applying to all internet services and accept that, where the necessary criteria are met, some internet services can fall within the VAT exemption and it is the arrangements between the parties and the nature of the services themselves that determines the VAT liability and not the means by which those services are delivered.

HMRC see the decision as applying, in particular, to advertising/promotional type services such as internet ‘click through’ services and mail-shot and leaflet distribution services where the provider does little more than put one party in touch with the other and plays no part in any interaction between the parties once that introduction has been made. Such services are specifically excluded from the VAT exemption and are taxable regardless of whether (as with InsuranceWide’s co-branded websites) the products are promoted in the name of the provider of the service, the provider is an insurance agent or broker by profession, or whether payment is made by fee or commission.

In circumstances (which would include certain ‘affinity’ arrangements) where the provider is clearly acting as an agent of an insurer or insurers and is playing a more active role in arranging the policies than mere introduction – for example, negotiating terms and conditions of the insurance contacts, assisting with forms/queries and actively recommending/endorsing the insurance product/s – VAT exemption continues to apply.

About the Author

© Crown Copyright 2007.

A licence is need to reproduce this article and has been republished for educational / informational purposes only. Article reproduced by permission of HM Revenue & Customs under the terms of a Click-Use Licence. Tax briefs are updated regularly and may be out of date at time of reading.

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Article Published/Sorted/Amended on Scopulus 2007-11-22 22:56:15 in Tax Articles

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