The Court of Appeal handed down its judgment in Commissioners for Her Majesty's Revenue and Customs v Services Limited and Trader Media Group Limited [2010] EWCA Civ 422 on 22 April 2010. The case concerned the respondents' VAT status.

The provision by an 'insurance broker' or 'insurance agent' of any of the services of an 'insurance intermediary' is exempt from VAT (article 135(1)(a) of Council Directive 2006/112 EC previously article 13B(a) of the Sixth Council Directive 77/388 EEC and in domestic legislation, Schedule 9, Group 2, Item 4 of the Value Added Tax Act 1994).

In this case, HMRC jointly appealed two judgments from the VAT and Duties Tribunal. In 2007 the Tribunal had ruled that Insurancewide's services did not fall under the exemption and that Trader Media's services did fall under the exemption. Subsequently, however, the Tribunal had, in an order of 15 May 2009, allowed an appeal by Insurancewide of the 2007 decision and denied an appeal by HMRC of the 2007 Trader Media decision. In this joined appeal to the Court of Appeal, HMRC argued that Insurancewide and Trader Media were nothing more than providers of 'click-through' facilities. Insurancewide and Trader Media argued that they were insurance brokers or agents and the services they provided, which introduced the person seeking insurance to the insurer, were those of an insurance intermediary. was a provider of an online service to individuals allowing them to compare insurance cover from various insurance companies. The website provided a means for the individual to contact the insurance provider. Similarly, Trader Media ran a website which included an "insurance centre" through which customers could obtain quotes for car insurance from a panel of selected insurers.

After considering previous European case law and the domestic and European legislation, the Court of Appeal set out a number of principles to apply when determining whether or not an insurance broker or agent is exempt from VAT, the most notable being:

  • whether or not a person is an insurance broker or an insurance agent, within the ambit of Article 13B, depends on what they do. How they choose to describe themselves or their activities is not determinate;
  • it is not necessary for the taxpayer to perform precisely the description of activities in Article 2(1)(a) or (b) of the Insurance Directive;
  • it is not necessary for a person to be carrying out all the functions of an insurance agent or broker. It is sufficient if a person is one of a chain of persons bringing together an insurance company and a potential insured and carrying out intermediary functions;
  • the above principles must be applied to the Insurance Intermediary Exemption in Schedule 9 of the Value Added Tax Act 1994 so that the interpretation of domestic law reflects the jurisprudence of the European Court of Justice.

Applying these principles, the Court of Appeal held that Insurancewide and Trader Media were more than mere conduits and so fell within the exemption. It was sufficient that they were providing services characteristic of an insurance broker or agent, and which were vital to the process of introducing those seeking insurance with insurers, even if they were only part of a chain of such persons. HMRC's request that the Court of Appeal refer the cases to the European Court of Justice for a preliminary ruling was also dismissed by the Court of Appeal.

The judgment can be found here: