Insurancewide.com Services Ltd v HM Revenue and Customs
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE ETHERTON,Lord Justice Pitchford,Lord Justice Longmore |
| Judgment Date | 22 April 2010 |
| Neutral Citation | [2010] EWCA Civ 422 |
| Court | Court of Appeal (Civil Division) |
| Date | 22 April 2010 |
| Docket Number | Case No: A3/2009/1300 CH/2007/APP/0435 |
[2010] EWCA Civ 422
IN THE HIGH COURT OF JUSTICE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CHANCERY DIVISION
Sir Edward Evans-Lombe
Before: Lord Justice Longmore
Lord Justice Etherton
and
Lord Justice Pitchford
Case No: A3/2009/1300
CH/2007/APP/0806
CH/2007/APP/0435
Miss Alison Foster Q.C. and Mr Paul Key (instructed by HMRC) for the Appellant
Ms Valentina Sloane (instructed by Forbes Hall LLP) for the 2 nd Respondent
The 1st Respondent was not represented
Hearing dates: 2, 3 and 4 th March 2010
Introduction
The two appeals, to which this judgment relates, concern the exemption from Value Added Tax (“VAT”) contained in Schedule 9, Group 2, Item 4 to the Value Added Tax Act 1994 (“ VATA 1994”) for the provision of services by an insurance broker or insurance agent of any of the services of an insurance intermediary (“the Insurance Intermediary Exemption”). The significant feature of both appeals is that each taxpayer claimed the exemption by virtue of the facility which they provided through their respective websites for a member of the public to have access to an insurer or an insurance broker or insurance agent, with or through whom an insurance contract could be made.
The appeals are by the Commissioners for Her Majesty's Revenue & Customs (“HMRC”) from an order of Sir Edward Evans-Lombe made on 15 May 2009. By that order the Judge allowed an appeal by the first Respondent, InsuranceWide.Com Services Limited (“InsuranceWide”), from the decision of the VAT and Duties Tribunal (“the Tribunal”) released on 8 November 2007 (“the InsuranceWide Tribunal Decision”) that the supplies made by InsuranceWide fell outside the Insurance Intermediary Exemption. By the same order the Judge dismissed an appeal by HMRC from a decision of the Tribunal released on 8 May 2008 (“the Trader Media Tribunal Decision”) that the services provided by the second Respondent, Trader Media Group Limited (“Trader Media”), fell within the Insurance Intermediary Exemption. The InsuranceWide Tribunal Decision and the Trader Media Decision were themselves made on appeal from decisions of HMRC rejecting the claims of InsuranceWide and Trader Media respectively to the Insurance Intermediary Exemption. The precise details of that rejection in each case are not material for the purposes of this judgment.
InsuranceWide is not currently trading and is subject to a Company Voluntary Arrangement. It was not represented by counsel or solicitors at the hearing of the appeals. One of its directors, James Harrison, attended for part of the hearing, but did not make any submissions of law on its behalf.
The European context
The imposition of VAT was the result of the Sixth Council Directive 77/388 EEC of 17 May 1977 (“the Sixth Directive”). The Sixth Directive required member states to impose a tax on the supply of goods and services. Article 13 of the Sixth Directive provided that the supply of certain services should be exempt from VAT. The Insurance Intermediary Exemption was intended to implement the exemption in Article 13B(a) of the Sixth Directive (“Article 13B(a)”), which was as follows.
“B Other exemptions
Without prejudice to other Community provisions, Member States shall exempt the following under conditions which they shall lay down for the purpose of ensuring the correct and straightforward application of the exemptions and of preventing any possible evasion, avoidance or abuse:
(a) insurance and re-insurance transactions including related services performed by insurance brokers and insurance agents; …”
That exemption is now to be found in the same terms in Article 135(1)(a) of the recast Council Directive 2006/112/EC of 28 November 2006 on VAT (“the 2006 VAT Directive”). Both in the Court below and in this Court the parties presented their arguments by reference to the Sixth Directive since the decided cases on which they rely were decided under the pre-Article 135 law. I shall similarly appraise those arguments by reference to the Sixth Directive save where it is necessary to refer specifically to the 2006 VAT Directive.
The Sixth Directive did not contain, and the 2006 VAT Directive does not contain, any definition of the expressions “insurance brokers”, “insurance agents” or “related services” for the purposes of Article 13B(a) and Article 135(1)(a) respectively.
The expressions “insurance brokers” and “insurance agents” do, however, appear in Council Directive 77/92/EEC of 13 December 1976 (“the Insurance Directive”), which was made for the purpose of regulating the freedom of establishment throughout the EEC, pursuant to Article 43 EC Treaty, of such professions as insurance brokers and insurance agents. It contained a recital that, in view of the differences between member states as regards the scope of activities of insurance agents and brokers, it was desirable to define as clearly as possible the activities to which the Insurance Directive applied. Article 2 of the Insurance Directive provided as follows:
“Article 2
1. This Directive shall apply to the following activities falling within ex ISIC Group 630 in Annex III to the General Programme for the abolition of restrictions on freedom of establishment:
(a) professional activities of persons who, acting with complete freedom as to their choice of undertaking, bring together, with a view to the insurance or reinsurance of risks, persons seeking insurance or reinsurance and insurance or reinsurance undertakings, carry out work preparatory to the conclusion of contracts of insurance or reinsurance and, where appropriate, assist in the administration and performance of such contracts, in particular in the event of a claim;
(b) professional activities of persons instructed under one or more contracts or empowered to act in the name and on behalf of, or solely on behalf of, one or more insurance undertakings in introducing, proposing and carrying out work preparatory to the conclusion of, or in concluding, contracts of insurance, or in assisting in the administration and performance of such contracts, in particular in the event of a claim;
(c) activities of persons other than those referred to in (a) and (b) who, acting on behalf of such persons, among other things carry out introductory work, introduce insurance contracts or collect premiums, provided that no insurance commitments towards or on the part of the public are given as part of these operations.
2. This Directive shall apply in particular to activities customarily described in the Member States as follows:
(a) activities referred to in paragraph 1 (a)…
in the United Kingdom: insurance broker:…
(b) activities referred to in paragraph 1(b):—…
in the United Kingdom: agent:…
(c) activities referred to in paragraph 1(c):-
in the United Kingdom: sub-agent.”
Council Directive 2002/92/EEC of 9 December 2002 on insurance mediation (“the Insurance Mediation Directive”) replaced the Insurance Directive. It contained recitals that: (6) insurance and reinsurance intermediaries should be able to avail themselves of the freedom of establishment and the freedom to provide services which are enshrined in the EC Treaty; (8) the co-ordination of national provisions on professional requirements and registration of persons taking up and pursuing the activity of insurance mediation can contribute both to the completion of the single market for financial services and to the enhancement of customer protection in that field; and (9) various types of persons or institutions, such as agents, brokers and “bancassurance” operators, can distribute insurance products, and equality of treatment between operators and customer protection requires that all these persons or institutions be covered by the Directive. The Insurance Mediation Directive introduced the compendious expressions “insurance mediation” and “insurance and reinsurance intermediaries”, which included agents, brokers and others. The expressions “insurance mediation” and “insurance intermediary” were defined in Article 2(3) and (5) respectively as follows:
“(3) ‘insurance mediation’ means the activities of introducing, proposing or carrying out other work preparatory to the conclusion of contracts of insurance, or of concluding such contracts, or of assisting in the administration and performance of such contracts in particular in the event of a claim.”
“(5) ‘insurance intermediary’ means any natural or legal person who, for remuneration, takes up or pursues insurance mediation:”
The domestic legislation
The Insurance Intermediary Exemption contained in Schedule 9, Group 2, Item 4 to VATA 1994 was intended to implement Article 13B(a). It provides for the following exemption from VAT.
“Item number…
4. 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 –
(a) are related (whether or not a contract of insurance or re-insurance is finally concluded) to an insurance transaction or a re-insurance transaction; and
(b) are provided by that broker or agent in the course of his acting in an intermediary capacity.
NOTES
(1) For the purposes of Item 4 services are services of an insurance intermediary if they fall within any of the following paragraphs:
(a) the bringing together, with a view to the insurance or re—insurance of risks of -
(i) persons who are or may be seeking insurance or re-insurance, and
(ii) persons who provide insurance or re-insurance:
(b) the...
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