Input tax on supply of black box to policyholder is not recoverable

The taxpayer formerly known as Ingenie was the representative member of a VAT group of which ISL was also a member. ISL supplied car insurance intermediary services to young drivers. Under the terms of the insurance black boxes – telematics devices – were installed in the policyholder’s car. The taxpayer claimed input tax on the provision and fitting of the black boxes on the basis there were taxable supplies made by ISL.

HMRC refused the claim and the First-tier Tribunal dismissed the taxpayer’s appeal.

The Upper Tribunal considered first whether ISL made a supply to policyholders for a consideration for VAT purposes. It agreed with the First-tier Tribunal that there was not a supply of goods but instead one of services. This was because ownership of the black box remained with ISL and only became the property of the policyholder after their insurance lapsed or was cancelled.

The...