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Daily Insurance Industry News
Wednesday 13th of December 2017
April 23, 2010

HMRC fails in online insurance introducer VAT appeal

by Gill Montia

Story link: HMRC fails in online insurance introducer VAT appeal

HM Revenue & Customs (HMRC) has failed in its appeal against a High Court ruling which established that the commission received by online businesses that introduce customers to insurers is exempt from VAT.

The long-running case involves Insurancewide.com and Trader Media Group, which receive commission for aggregating potential clients for insurance companies.

As a website provider, Insurancewide.com takes no part in the insurance policy negotiations and took the view that it functioned as an intermediary service, and was therefore not liable for VAT.

However, HMRC argued that the firm is engaged in agency or advertising services, which are liable for VAT.

The case has been progressing through the courts for over five years and yesterday, the Court of Appeal held that it was not necessary for Insurancewide to perform all the roles of a traditional insurance broker, or introducer, to be VAT exempt.

Commenting on the outcome, the managing director of TMF VAT & IPT Services, Richard Asquith, warns there may yet be a “nasty sting in the tail” for some insurers.

He explains: “As part of their service level agreements with online introductory sites, they may have clauses to meet any VAT charges.”

Continuing: “Since such services are now clearly VAT exempt, the website owners will not be able to claim back VAT on their running costs. In such situation, the disallowed VAT loss may pass to the insurer.”

 

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