The primary issue was the commissioners’ disputed decision that supplies made by the appellant fell outside the VAT exemption in VATA 1994, Sch. 9, Grp. 2, item 4. The appellant was formed in 1999 for the purpose of being a conduit for the sale of insurance via the internet. It provided an online comparison service for cover from a number of insurance companies and received commissions from those companies for introductions which led to the completion of insurance contracts. Initially, it received commission from only one insurance provider, Cox Insurance Holdings plc. However, it later evolved to the extent that it received commissions from most of the major insurers. In 2002, more sophisticated technology was introduced in the form of the InsuranceWide Wizard. This recorded essential information required by underwriters and applied that information at high speed and in large volumes to direct prospective purchasers to the most appropriate insurer and provide the tools to compare a shortlist of selected insurers.

The commissioners made four decisions which were disputed by the appellant and these were originally appealed separately. However, the appeals were consolidated by the tribunal.

Article 13(B)(a) of the sixth directive provides that EC member states shall exempt ‘insurance and reinsurance transactions, including related services performed by insurance brokers and insurance agents.’ The UK law derived from the directive provides, in VATA 1994, Sch. 9, Grp. 2, item 4, exemption for ‘the provision by an insurance broker or agent of any of the services of an insurance intermediary in a case in which those services (a) are related ... to an insurance transaction or a reinsurance transaction; and (b) are provided by that broker or agent in the course of his acting in an intermediary capacity.’

The appellant relied on the Cox agreement as encapsulating a relationship between an insurer and an agent. It submitted that it later moved from being an agent for one group of insurers to being equivalent to an insurance broker, acting on behalf of a number of insurers, albeit not being a broker per se. However, contended the appellant, it did fall within items 4(a) and (b) of Grp. 2 of Sch. 9 to VATA 1994 and, in bringing persons together with a view to insurance or reinsurance, it fell within Notes (1)(a) and (2) to Grp. 2. The appellant submitted that, although its technological basis and its clients both changed, the nature of its business remained constant. Further, the appellant submitted that its activities were clearly exempt within the sixth directive as well as within domestic legislation and relied on Staatssecretaris van Financiën v Arthur Andersen & Co Accountants c.s. (Case C-472/03) [2006] BVC 228 to support this view.

It argued that if it was paid commission by insurers for finding prospects and introducing them to the insurers, then its services must be exempt. The appellant also cited Ludwig v Finanzamt Luckenwalde (Case C-453/05) in which it was held that there did not have to be a contractual link between a negotiator and a party at either end of the chain; rather it was necessary to look at the very nature of the services rendered. These, in the appellant's view, pointed to the supplies being exempt.

The commissioners submitted that the appellant's supplies were not within the VAT exemption for four reasons: it was not an ‘insurance broker or insurance agent’ (Grp. 2, item 4); it was not providing services of an ‘insurance intermediary’ (Grp. 2, item 4 and Notes (1) and (7)); its services were not ‘related’ to an insurance transaction (Grp. 2, item 4(a) and Note (7)); and it did not provide its services ‘in the course of acting in an intermediary capacity’ (Grp. 2, item 4(b) and Notes (2) and (7)). The commissioners argued that each and every one of these conditions must be satisfied for exemption to apply. The commissioners further submitted that the judgment in Arthur Andersen relied on by the appellant did not provide the support for exemption sought by the appellant. Whilst, the appellant had a relationship with both the insurer and the insured, it did not have a relevant legal relationship and, therefore, was not acting as a mediator between the two. Further, with regard to the question of whether the appellant was an intermediary, the commissioners submitted that it had no involvement at all during the critical time frame, namely from when the insurer started dealing with the person who was seeking insurance. In the commissioners’ view, a number of required elements were missing: there was no real giving of advice or recommendations; the appellant did not deal with general or policy-specific queries; the insurer or other intermediary gave binding quotes direct to the persons seeking insurance and no role was played by the appellant; the appellant provided no assistance with applications made by the persons seeking insurance; the appellant had a passive role and did not have the ability to influence or vary the terms of the quote; and the appellant was not involved in the renegotiation of terms or in claims handling, policy administration or policy renewals.

The tribunal dismissed the company's appeal.

1. The appellant did not act as an insurance agent at any stage under either Community law or domestic UK legislation: it had no power to bind the insurance company, it specifically disclaimed being an agent and it had no role to play in negotiating the terms of any insurance contract.
2. The finding that the appellant was not an insurance agent was sufficient to decide the appeal in favour of the commissioners but, in the event that it was wrong on this point, the tribunal considered the other matters in dispute.
3. In considering the concept of ‘intermediary’, the tribunal found that during the pre-Wizard phase, the appellant was not an intermediary, but after the introduction of the Wizard the appellant conducted regular negotiations with a range of insurers about the nature and price of their products and generally acted in an intermediary capacity in bringing together the relevant parties with a view to insurance, as well as carrying out work preparatory to the conclusion of contracts of insurance.
4. The appellant came within the European concept of an intermediary in art. 13(B)(a) of the sixth directive to the extent that it provided services related to insurance and reinsurance, as well as being an intermediary within VATA 1994.
5. The appellant's contention that in effect there was no difference between the concepts of agent and intermediary was rejected since, although the two concepts were equated in Notice 701/36/2002, they were clearly distinguished in VATA 1994.
6. The tribunal allowed the appeal only in respect of a disputed misdeclaration penalty because of the complex and technical nature of the case.

No. 20,394