Separate contract

The taxpayer was an insurance intermediary which designed and administered assistance insurance.

After finding an insurer the taxpayer would negotiate the terms of the cover and offer the insurance-backed service to the public.

The relevant marketing material stated that on taking up the cover the insured would enter into two contracts: one with the taxpayer for which included an arrangement and administration fee would be paid and the other was with the insurer.

HMRC took the view that the arrangement fee paid by the insured to the taxpayer was to be regarded as a payment received under the contract and formed part of a premium on which insurance premium tax was payable under FA 1994 s 72(1A).

The VAT tribunal subsequently dismissed the taxpayer’s appeal and the taxpayer appealed that decision.

In the High Court Mr Justice Blackburne said...