Exemption does not apply

Prudential transferred its general insurance business to Winterthur. Under the transfer agreement Winterthur was to pay Prudential £350m on completion together with commission on renewals of Prudential policies which were in existence at the time of transfer.

Winterthur transferred the business to another company UKI which was part of the Royal Bank of Scotland (RBS) group.

Prudential claimed exemption from VAT in respect of commissions on the basis they were payments for the transfer of a business as a going concern.

The company said the commissions should be exempt because they were payments for insurance brokerage and insurance agency services within article 13B(a) of the Sixth Directive and VATA 1994 Sch 9 group 2 item 4.

The VAT tribunal dismissed the appeal. Given he financial impact of the case would be borne by RBS which would have...