Claims Advisory Group Limited v The Commissioners for HM Revenue and Customs [2021] UKUT 0199 (TCC)
| Jurisdiction | UK Non-devolved |
| Judge | Mr Justice Michael Green,Judge Rupert Jones |
| Neutral Citation | [2021] UKUT 0199 (TCC) |
| Subject Matter | 16 August 2021 |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Published date | 16 August 2021 |
[2021] UKUT 0199 (TCC)
Appeal number: UT/2019/0166
VAT – Exemption under Article 135(1)(a) of the Principal VAT Directive (PVD) –
for insurance and reinsurance transactions, including related services performed by
insurance brokers and insurance agents – economic purpose and commercial reality
of Appellant’s services were not that of insurance transactions but making claims for
compensation in respect of mis-sold payment protection insurance (PPI) – not acting
as an insurance agent nor performing services related to insurance transactions –
appeal dismissed
UPPER TRIBUNAL
TAX AND CHANCERY CHAMBER
CLAIMS ADVISORY GROUP LIMITED
Appellant
- and -
THE COMMISSIONERS FOR HER
MAJESTY’S
Respondents
REVENUE & CUSTOMS
TRIBUNAL:
Mr Justice Michael Green
Judge Rupert Jones
Sitting in public at The Rolls Building, 7 Rolls Buildings, London EC4 on 11 &
14 June 2021
Roderick Cordara QC and Stephen Donnelly, Counsel, instructed by Rosetta Tax
Ltd, for the Appellant
Sarabjit Singh QC, Counsel, instructed by the General Counsel and Solicitor to
HM Revenue and Customs, for the Respondents
© CROWN COPYRIGHT 2021
2
DECISION
Introduction
1. The Appellant company makes claims on behalf of individual customers who
have been mis-sold payment protection insurance (‘PPI’) by financial institutions.
When those claims are successful, compensation is paid to the Appellant’s customers
in sums equivalent to the premiums they have paid to the financial institution for the
mis-sold PPI plus interest. The Appellant receives a fee for its services, which is
calculated as a percentage of the compensation paid to the customer by the financial
institution.
2. The Appellant appeals the decision of the First-tier Tribunal (Tax Chamber)
(‘FTT’) dated 6 August 2019 in which it decided that the Appellant’s supplies to its
customers were liable to VAT. The FTT decided that the Appellant’s services fell
outside the exemption under the Principal VAT Directive (2006/112/EC) (‘PVD’)
because: (1) the supplies were not insurance transactions for the purposes of Article
135(1)(a) of the PVD (and item 1 of Group 2 of Schedule 9 to the Value Added Tax
Act 1994 (‘VATA’)); and (2) they were not services performed by an insurance broker
or insurance agent that were related to insurance transactions and as such were not
within the exemption under Article 135(1)(a) of the PVD (nor item 4 of Group 2 of
Schedule 9 to VATA).
3. The issues in this case are whether the Appellant’s services provided to its
customers are exempt from VAT by virtue of being (1) insurance transactions or (2)
services performed by an insurance agent related to insurance transactions.
4. The Appellant submits that the FTT erred in law in deciding both issues against
it.
The Law
5. Article 135(1)(a) of the PVD (which was previously article 13B(a) of the Sixth
Directive (77/388/EEC)) exempts the following supplies from VAT: “insurance and
reinsurance transactions, including related services performed by insurance brokers
and insurance agents”.
6. Pursuant to the UK domestic legislation implementing the exemption, “Insurance
transactions and reinsurance transactions” are exempt under item No. 1 of Group 2 of
Schedule 9 to VATA, and related services performed by insurance brokers and
insurance agents are exempt under item No. 4.
7. Item 4 exempts:
“The provision by an insurance broker or insurance agent of any of the services of an
insurance intermediary in a case in which those services—
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