In Unicom Insurance Services Limited v HMRC3 , the FTT held that the recipient of supplies made by the insurance broker Unicom Insurance Services Limited (Unicom), was the non-EU insurer, rather than the UK consumers taking out the insurance policies and allowed Unicom’s appeal against HMRC’s decision to deny recovery of input tax associated with those supplies.


Unicom carries on business in the UK as an insurance agent providing introductory services via its website. Unicom does not write insurance policies itself but effects an introduction between ‘consumers’ (in the UK) and insurance companies for a commission. Unicom collected the gross premiums from the insurance customers, retained 25% as commission and passed the remaining 75% to the insurer. 95% of its intermediary services were supplied to Tradewise Insurance Company Limited (TWIC) which belongs in Gibraltar and therefore Unicom claimed input tax recovery on these supplies under Article 3 of the Value Added Tax (Input Tax) (Specified Supplies) Order 1999.

HMRC denied Unicom the input tax claimed, on the basis the supply was made to the consumers who belong in the UK for VAT purposes. Since those services were exempt supplies, HMRC was of the view that Unicom could not recover input tax associated with making those supplies. The basis of HMRC’s argument was that, by means of its website and other documents, Unicom referred to consumers as its clients. Accordingly, HMRC argued that when consumers asked Unicom to approach insurance companies for cover, the presumption should be applied that Unicom did so as agent for the consumers.

It was common ground between the parties that the services provided by Unicom fell within the insurance exemption and therefore the only issue the FTT had to determine was whether Unicom was supplying its intermediary services to TWIC or to consumers in the UK.

FTT’s decision

The FTT allowed the appeal and held that Unicom provided services to the insurer, not to the insured. The FTT reviewed the contractual terms between Unicom and TWIC and between Unicom and the consumers and concluded that they pointed to the conclusion that Unicom was supplying its intermediary services to TWIC as it was acting as agent of TWIC, pursuant to the service agreement and prevented Unicom from acting as the insured’s agent. Further, only TWIC had the contractual right to compel Unicom to provide those intermediary services and the consumers only had a limited contract with Unicom. The FTT considered the contractual arrangements reflected the economic reality and unhelpful statements on Unicom’s website and in the service agreement referring to the insured as “customers” or “clients” did not detract from that.


The FTT focused on a review of the contractual arrangements to ascertain the correct VAT treatment on supplies made. The importance of considering contractual documents and the consequent VAT position at the outset of supply relationships cannot be underestimated to ensure input tax recovery and to minimise the risk of a dispute arising with HMRC.

A copy of the decision can be found here.