HMRC are not appealing the decision of the Court of Appeal in the case of InsuranceWide.com Services Ltd and Trader Media Group Ltd. HMRC have issued Revenue & Customs Brief 31/10 explaining their position on insurance introductory services. The Brief confirms that insurance introductory services are exempt from VAT when a provider is doing more than acting as a mere conduit between an individual and an insurance provider. HMRC’s view is that an intermediary acts as more than a mere conduit where the following four conditions are met:
- The services are provided by someone engaged in the business of putting insurance companies in touch with potential clients or more generally acting as intermediaries between the two parties (although this may not necessarily be their principal business activity).
- The business provides the means (that is, by way of an internet ‘click through’ or some other form of introduction) by which a person seeking insurance is introduced to a provider of insurance or to another intermediary in a chain leading to an insurance provider.
- That introduction takes place at the time a customer is seeking to enter into an insurance contract (although in some instances an insurance contract may not actually go on to be concluded).
- The introducer also plays a proactive part in putting in place the arrangements under which that introduction is effected.
The Brief also states that HMRC will repay overpaid VAT charged on insurance introductory services that fall within the scope of the InsuranceWide and Trader Media Group case, subject to the normal capping and unjust enrichment rules.