The taxpayer argued its supplies were exempt based on an exemption which applies for supplies which are insurance transactions, which includes intermediary services performed by an insurance broker or insurance agent that are related to insurance transactions. Although the underlying policies that were mis-sold are undoubtedly insurance policies, the economic reality is that, even if you were able to apply the wider definition in UK law of what an insurance intermediary does (which includes just claims handling under delegated authority from the insurer – this is ultra vires EU law of course – see Accenture (C-472/03)), the taxpayer was not acting as an insurance intermediary when it submitted the compensation claims. These were not claims made under the insurance contract, they were claims that the contract was mis-sold, often because the customer either did not need the cover or their personal circumstances meant they could never make use of it. It is therefore slightly surprising the case was appealed to the UT and the outcome (taxpayer loss) is no surprise.
Source KPMG
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