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Internet insurance introductions are exempt from VAT
09 July 2009
The High Court has decided that insurance commissions earned from internet introductions are exempt from VAT. This followed jointly-heard appeals by the taxpayer and HM Revenue & Customs from two conflicting decisions of the VAT Tribunal on similar facts.
After a detailed analysis of the case law, the Judge held in InsuranceWide.com Services Ltd v RCC and RCC v Trader Media Group that the act of introduction alone is sufficient to count as an exempt insurance intermediary service within the meaning of EU and UK VAT law. This was in the face of HMRC arguing that maintaining a website amounted to advertising, which is subject to VAT, and that an introducer was not sufficiently involved with the parties to constitute an insurance intermediary within the legislation.
Mark Chesham of BTG Tax said: “This is a welcome clarification of a particularly contentious area of VAT law and brings the law into the 21st Century. We still await however the outcome of the EU review which may restrict the scope of the exemption for these types of services in future'.
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