In Claims Advisory Group Ltd v HMRC [2019] TC07308 the First tier tribunal decided that a company engaged in recovering personal protection insurance (PPI) was not itself making an exempt supply of insurance services.
Insurance and reinsurance transactions and related services performed by insurance brokers and insurance agents are exempt from VAT under Group 2 of Schedule 9 to the VATA 1994.
Claims Advisory Group were a PPI claims company helping consumers recover overcharged fees levied by banks and other financial institutions.
- They claimed these services were exempt from VAT.
- HMRC said the supplies were standard rated.
The FTT, in agreeing that the supplies were standard rated, said the essence of an insurance contract is indemnity against a risk and that was not present in this case.
- The company was assisting its customers with the making of claims for compensation, not the termination of insurance relationships or providing insurance transactions or services related to insurance contracts.
- Its services were not exempt from VAT.
- For similar reasons, the tribunal rejected the alternative argument that the company was an insurance agent.
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