R v Commissioners of Customs and Excise, ex parte Lunn Poly Ltd and Another

JurisdictionEngland & Wales
Judgment Date26 February 1999
Date26 February 1999
CourtCourt of Appeal (Civil Division)

Court of Appeal

Before Lord Woolf, Master of the Rolls, Lord Justice Schiemann and Lord Justice Clarke

Commissioners of Customs and Excise, Ex parte Lunn Poly Ltd and Another

Insurance - travel insurance - differential insurance premium tax unlawful

Differential insurance premium tax unlawful

The provisions of the Finance Act 1997 which introduced differential rates of insurance premium tax on travel insurance, whereby contracts sold by independent insurance companies attracted a lower rate than those sold by or through tour operators or travel agents, constituted state aid within article 92 of the EC Treaty and were illegal in absence of notification to and clearance by the European Commission pursuant to article 93(3).

The Court of Appeal so held in a reserved judgment dismissing the Crown's appeal against the decision of the Queen's Bench Divisional Court (Lord Justice Kennedy and Mr Justice Maurice Kay) (The Times April 8, 1998) granting a declaration to the applicants, Lunn Poly Ltd, a travel agent and part of the Thomson Travel Group, and Bishopsgate Insurance Ltd, a specialist travel insurer selling policies mainly through travel agents, and part of a group ultimately owned by a Dutch company.

Mr Paul Lasok, QC and Mr Aidan Robertson for the Crown; Mr Gerald Barling, QC and Mr James Flynn for the applicants.

THE MASTER OF THE ROLLS said that section 21 of the Finance Act 1997 had amended section 51 of the Finance Act 1994 by replacing a previous uniform rate of 2.5 per cent insurance premium tax with two rates: a standard rate of 4 per cent and a higher rate of 17.5 per cent on certain travel insurance contracts: see section 51A of the 1994 Act, as inserted by section 22 of the 1997 Act.

The general effect of Schedule 6A(4) to the 1994 Act, as inserted by section 22 of the 1997 Act, was to make the premiums on travel insurance arranged by tour operators, travel agents or the like subject to the higher rate. If the contract of insurance was arranged by anyone else such as an independent insurance company the lower rate was payable.

The applicants argued that those paying insurance premium tax at the lower rate were receiving a state aid because the United Kingdom was forgoing the difference between the higher rate tax and the lower rate tax in the case of those not subject to the higher rate.

If a provision in national legislation conflicted with a requirement of the EC Treaty, it was the responsibility of the domestic...

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13 cases
1 books & journal articles
  • United Kingdom
    • European Union
    • Study on the enforcement of State aid law at national level Part I. Application of EC State aid rules by national courts.
    • 1 January 2006
    ...argument was rejected. i) Actions instituted by competitors: R v Customs and Excise Commissioners, ex parte Lunn Poly Limited and another [1999] STC 350 (B) Facts and legal issues: in January 1999, three judges of the Court of Appeal heard an appeal by the Commissioners of Customs and Excis......

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