Weekly VAT News

WTGIL Limited: VAT on black box insurance – CA

WTGIL Limited (formerly Ingenie Limited) was set up to provide black box insurance to young drivers. It entered into agreements with a panel of insurers, marketed insurance through its own website and through price comparison websites, and engaged Ageas Retail Limited to administer the policies. Policyholders were required to have Ingenie’s telematics devices fitted to their cars, and the information from them would be used to monitor their driving behaviour and increase or decrease premiums accordingly. Ingenie made a claim to HMRC to recover VAT incurred on purchasing the devices, which HMRC rejected on the basis that Ingenie was making exempt supplies of insurance intermediation services. The Upper Tribunal had considered that Ingenie was supplying services that were not exempt insurance intermediation services, but as there was no direct link between the services and any consideration provided by the policyholder, there was no taxable supply of services for consideration that entitled Ingenie to recover input tax. The Court of Appeal has now held that, in providing and fitting the devices, Ingenie was making exempt supplies of insurance intermediation services. The Court referred to “the simple point that telematics car insurance is a form of motor insurance provided in return for an annual premium”, and that Ingenie was acting as an intermediary. This analysis was supported by the contractual terms and the statutory language of the VAT exemption. Accordingly, Ingenie’s appeal was dismissed, albeit for different reasons than its appeals were dismissed by the UT, and the First-tier Tribunal. (Contact: Nicole Faith)

Kosmiro (A Oy): VAT liability of factoring activities – CJEU AGO

A Oy is a Finnish company which provides debt factoring services. Typically factoring is used by businesses to assign debts on unpaid invoices to a factoring company to obtain early payment, whilst simultaneously discharging the task of collecting the payments. The factoring contracts between A and its clients provided that A charged various fees and commissions. However, the reference to the CJEU focused on the VAT treatment of two elements: (i) a ‘factoring commission’, a charge levied in advance by A, expressed as a percentage of each invoiced debt; and (ii) an ‘arrangement fee’, a flat-rate charge payable to A for activating the factoring process. In this regard, the CJEU was asked whether this remuneration represented consideration for a supply of services within the scope of VAT, and, if so, whether those services were exempt as the ‘granting of credit’, or excluded from the exemption as ‘debt collection’ under Article 135(1)(d) of the EU Principal VAT Directive, or apportioned accordingly. Advocate General Rantos considered that both elements were consideration for supplies of services, and opined that such services, both in relation to ‘trade factoring’ (whereby the risk relating to the debts is transferred to A) and ‘invoice factoring’ (financing guaranteed by invoices), represent a single and indivisible supply relating to ‘debt collection’ which is subject to VAT. AG Rantos also concluded that Article 135(1)(d) is “unconditional and sufficiently precise” so as to have direct effect to contest the application of a rule of national law which is contrary to it. (Contact: Chris Chatting)

Potential UK measures in response to US tariffs – request for input

The Department for Business and Trade has issued a request for input from businesses on the impact of potential UK tariffs that could be applied in response to the new US tariffs. The information gathered is intended to help the government assess the scope and impacts of any potential UK tariff measures. The government published an indicative list of US products to which future tariffs could apply. The list is intended to identify products that have a more limited impact on UK businesses and consumers. The government also said that it is engaging separately with industries and stakeholders affected by the imposition of US tariffs. The request for input closes on 1 May 2025. (Contact: Jeffrie Mann)

Weekly VAT News will be taking an Easter break – the next issue will be published on 28 April 2025.