This Brief explains HMRC's position following the Court of Appeal judgment in Insurancewide.com Services Ltd and Trader Media Group Ltd (Case ref A3/2009/1300). The Court of Appeal found against HMRC and upheld the decision of the High Court that certain supplies of insurance introductory services provided via the internet are exempt from VAT. HMRC are not appealing this decision further.

In light of the conclusions of the Court of Appeal as outlined above, HMRC now accept that insurance introductory services will be exempt from VAT when a provider is doing much more than acting as a ‘mere conduit’ through which a potential customer is passed to a provider.

Based on previous case law, the means by which a business is remunerated for its services, that is, whether by fee or commission or some other means, is not determinative of the liability. Whilst remuneration based on successful take-up may indicate an introduction has taken place it is not enough in itself to determine exemption and it is always important to consider what is actually being done rather than how it is paid for.

Although the judgment specifically concerned insurance intermediary services, it does also provide some general guidance on the application of the exemption to finance intermediary services. It must be borne in mind, however, that the UK and EU law covering the exemption for finance intermediary services is different from that for insurance intermediary services. For example, for most finance intermediary services to be exempt, UK law requires businesses to be both bringing together a prospective customer with a product provider with a view to entering a contract for the provision of financial services and carrying out work preparatory to the conclusion of those contracts.