Insurance services supplied direct or as an intermediary

Supplies of storage have been standard rated in the UK since 1 October 2012; they were previously exempt. But storage firms still have exempt income from insurance because members of the Self-Storage Association to which the taxpayer belonged have to ensure that all customers insure their goods.

The appeal concerned the taxpayer’s domestic customers who normally took a policy it arranged with a Guernsey-based company. 

HMRC said the taxpayer was supplying insurance services to UK customers. The income was therefore exempt from VAT with a partial exemption input tax restriction on related costs. It disallowed a voluntary disclosure claim made by the taxpayer totalling £793 830 and raised a separate assessment for £72 615. 

The taxpayer claimed it was supplying insurance intermediary services. So although the income was also exempt it could recover the input tax if the customer – the Guernsey company – receiving the intermediary services was...