Matter of choice

Supplies of insurance to taxi drivers

The taxpayer ran a taxi service and provided radio support to about 280 self-employed drivers. Most were owner-drivers but 74 rented a car from the taxpayer. They were charged £120 a week for the car and radio facilities and a further £45 a week if the drivers wanted to take third-party liability cover through the company.

The taxpayer said the £45 was an exempt supply of insurance (VATA 1994 Sch 9 group 2). HMRC claimed it was one element of a multi-supply that should be treated as standard rated. The First-tier Tribunal found for the taxpayer. HMRC appealed.

The Upper Tribunal considered first the nature of the supply. The judge found that as well as insuring the vehicles the taxpayer obtained cover for drivers. It was irrelevant that the drivers would have to rely on the taxpayer to enforce...