Professional fees were not a supply of insurance

The taxpayer charged annual fees to holders of self-invested pension plans (SIPPs) for services necessary to ensure the relevant conditions were met and that the plan was operated correctly – such as tax relief conditions were complied with and the holder had completed an ‘expression of wish’ form. It claimed that a SIPP qualified as a life-insurance product and therefore its fees were exempt from VAT. HMRC disagreed.

Services linked to insurance products are exempt from VAT by virtue of VATA 1994 Sch 9 Group 2 including premiums for the benefit of insurance cover. A premium is normally paid by the insured so that a specific risk is transferred to the insurer. HMRC’s view was that no insurance supplies were evident and that the taxpayer supplied ‘services of administration of the member’s own assets’. The fees were therefore standard rated.

The First-tier Tribunal agreed with HMRC that a SIPP...