In Commissioners for HM Revenue and Customs v Insurancewide.com Services Limited [2010] EWCA Civ 422, the Court of Appeal has given judgment on a claim concerning the Insurance Intermediary Exemption from VAT made by two price comparison web site operators offering indicative insurance quotes to customers. The exemption from VAT is contained in Schedule 9, Group 2, Item 4 to the Value Added Tax Act 1994 and is more fully described as an exemption for the provision of services by an insurance broker or insurance agent of any of the services of an insurance intermediary. The significant feature of both appeals is that each taxpayer claimed the exemption by virtue of the facility which they provided through their respective web sites for a member of the public to have access to an insurer or an insurance broker or insurance agent, with or through whom an insurance contract could be made.
While the judgment focuses on the finer details of the Insurance Intermediary Exemption and the Directive from which it stems, it does also cast light on the legal status of online web sites offering access to a range of services. The HMRC argument opposing the availability of the Insurance Intermediary Exemption was that neither claimant could show that it acted as an insurance broker or insurance agent because they merely provided a click through facility to a broker, agent or insurer; in the absence of any legal relationship with either the insurer or the insured or the prospective insured, and in the absence of any involvement in the negotiation of the terms of the insurance contract or its preparation or the collection of premiums or the handling of any claims, their activities were not such as to constitute them an insurance broker or insurance agent for the purposes of the Insurance Intermediary Exemption. HMRC claimed that the minimum requirement is the carrying on by the taxpayer of a business activity, the principle purpose of which is the putting together of the insured and the insurer with an impact on the terms of the contract and a negotiating role for one or other of the prospective insured and the prospective insurer as a go-between.
Etherton LJ, giving the lead judgment, gave this argument short shrift (at [86]-[87):
‘Although HMRC’s case is that the relevant functions performed by InsuranceWide and Trader Media were nothing more than the provision of a “click through” facility to a broker, agent or insurer, it is plain that both taxpayers were doing much more than that. They identified, and provided those looking for insurance with access to, insurers who provided a range of competitive insurance products. In both cases the evidence indicated that the insurers were appraised and selected bearing in mind the competitiveness of their pricing and products and their level of consumer service. In the post-Wizard phases, InsuranceWide provided those seeking insurance with a means of directing them most effectively and efficiently to the most appropriate insurers, whether directly or through another intermediary, to match their requirements. In the case of Trader Media the evidence was that it not only had an input into the questions to be answered by those seeking insurance, but, importantly, it made suggestions for the composition of the insurance panel based on its understanding of the experience and demographics of the consumers and with a view to providing customers with insurers who would quote competitive prices. Neither of them were … a mere “conduit”. Their relevant activities can fairly be described as the business of bringing together insurers and those seeking insurance, by contrast with the taxpayers in Skandia, Taksatorringen and Arthur Anderson, who were sub-contractors.
For the reasons I have given, I reject the proposition of law advanced by HMRC that neither InsuranceWide nor Trader Media can claim the benefit of the Insurance Intermediary Exemption because they did not have a legal relationship with either the insurer or the insured or the prospective insured. It is 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. In any event, they did have direct relations with the customers who used their website, just as much as Beheer, and they did have collaborative arrangements with intermediaries who did have legal relations with insurers. It would therefore also be immaterial that neither InsuranceWide nor Trader Media had anything to do with the negotiation of the terms of the insurance contract or its preparation or the collection of premiums or the handling of claims.’
A suggestion from HMRC that the issues in question be referred to the ECJ was also rejected.
