Winterthur Life UK Ltd (formerly Provident Life Association Ltd)
| Jurisdiction | UK Non-devolved |
| Judgment Date | 29 May 1997 |
| Date | 29 May 1997 |
| Court | Value Added Tax Tribunal |
VAT Tribunal
The following cases were referred to in the decision:
C & E Commrs v Richmond Theatre Management LtdVAT[1995] BVC 47
Card Protection Plan Ltd v C & E Commrs VAT[1994] BVC 20
Federated Pensions Services Ltd VAT(LON/91/124) No. 8932; [1993] BVC 601
Flood v Irish Provident Assurance Co Ltd ELR[1912] 2 Ch 597
Fuji Finance Inc v Aetna Life Assurance Co Ltd ELR[1997] Ch 173
Marac Life Assurance Ltd v IR Commrs [1986] 1 NZLR 694
Medical Defence Union Ltd v Department of TradeELR[1980] 1 Ch 82
Parry v Cleaver ELR[1970] AC 1
Prudential Insurance Co v IR Commrs ELR[1904] 2 KB 658
Insurance - Personal pension schemes - Whether schemes within the exemption in Value Added Tax Act 1994 schedule 9 group 2Value Added Tax Act 1994, Sch. 9, Grp. 2 - Alternatively whether the schemes fell within the exemption for dealings with money in Value Added Tax Act 1994 schedule 9 group 5Value Added Tax Act 1994, Sch. 9, Grp. 5.
The issue was whether the services supplied by two wholly-owned subsidiaries of the appellant, which supplied services in connection with two pension schemes, were making exempt or standard-rated supplies.
The appellant, Winterthur Life UK Ltd ("the life company"), was the representative member of a group of companies which included two wholly-owned subsidiaries, Personal Pensions Management Ltd ("PPM") and Winterthur Pension Trustees UK Ltd ("WPT"). PPM and WPT supplied services in connection with two pension schemes known as the Personal Pensions Management Scheme ("the PPM scheme") and the Winterthur Life Self-Administered Personal Pension Scheme ("the WPP scheme").
The commissioners claimed that the relevant services were standard-rated, because they did not fall within either Value Added Tax Act 1994 schedule 9 group 2Grp. 2, Sch. 9 as "insurance" or Value Added Tax Act 1994 schedule 9 group 5Grp. 5, Sch. 9 as the transfer receipt or any dealing with money or the making of arrangements for any such transaction.
The appellant submitted that the services were part and parcel of an insurance package supplied by the life company and were exempt by reason of Value Added Tax Act 1994 schedule 9 group 2Grp. 2, Sch. 9. Each of the two schemes, including the incidental services chargeable by PPM and WPT, constituted in their entirety "a provision of insurance" by the life company, which was a "permitted" insurer within s. 2, Insurance Companies Act 1992. Alternatively, the provision of an annuity under the schemes, which was their primary purpose, was the provision of insurance and this provision, under the terms of the schemes, could be made only by permitted insurer. This being so the schemes were "the making of arrangements for the provision of … insurance".
The commissioners contended that the services supplied by PPM and WPT were trust administration services and so standard-rated. Insurance is essentially contractual in nature and in the case of the schemes there was no contract between the only party which was a permitted insurer (the life company) and the member. There was nothing in the Taxes Act provisions to suggest that a personal pension scheme of the type authorised was to be a supply of insurance. Further, the moneys contributed by the member to the scheme were not "consideration" for benefits payable under the scheme since the moneys were impressed with a trust for the member and his dependents. In essence, the schemes were investments savings schemes and did not qualify as insurance withinValue Added Tax Act 1994 schedule 9 group 2Grp. 2.
Held, allowing the appeal:
1. The submission by the commissioners that the sole beneficiary under the trusts of the two schemes was the relevant member was plainly incorrect.
2. Funds contributed by the member, besides being impressed with the trusts mentioned by the commissioners, were also charged with the payment of administrative expenses of the scheme so that there was an element of monetary consideration moving from the member; the fact that this consideration was relatively small by comparison with the member's total contributions could not prejudice the insurance status of the scheme.
3. The schemes were designed to secure the payment of specific annuities and lump sums on particular contingencies and were in no way inconsistent with a contract of insurance.
4. The tribunal was satisfied that on the authorities the two schemes embodied contracts of insurance between the life company and the member and that, in consequence, the administrative services incidental to the implementation of those contracts were part and parcel of "the provision of insurance" by a permitted insurer so as to qualify for exemption under Value Added Tax Act 1994 schedule 9 group 2item 1, Grp. 2, Sch. 9,Value Added Tax Act 1994.
5. Alternatively, if that was incorrect, the relevant services were exempt because PPM and WPT were agents for the life company and were making arrangements for the provision of insurance.
6. While it was unnecessary for the tribunal to decide whether the services were exempt under Value Added Tax Act 1994 schedule 9 group 5Grp. 5, Sch. 9, it did not seem that the PPM scheme fell within Value Added Tax Act 1994 schedule 9 group 5Grp. 5, but it was possible that the WPT scheme did. In the event of it becoming necessary to consider the matter underValue Added Tax Act 1994 schedule 9 group 5Grp. 5, a further hearing would be required unless the parties could come to an agreement.
[The tribunal set out the facts summarised above and continued as follows.]
6.1 The nature of "insurance", more specifically of "life insurance", was recently considered by the Court of Appeal in Fuji Finance Inc v Aetna Life Assurance Co Ltd ELR[1997] Ch 173. Morritt LJ, giving the lead judgment, expressed the following conclusions on the issues relevant to this appeal at pp. 883-884 of the report:
The essence of life assurance, as emphasised in all cases is that the right to the benefits is related to life or death. The obvious case … is where the benefit is payable on death or its notifications. But over the years other less obviously life- or death-related events have been recognised as sufficient. Thus survival to a given date, as inJoseph v Law Integrity Insurance Co Ltd ELR(1912) 2 Ch 581, … being alive and therefore able to retire or leave a specified employment, as in NM Superannuation Pty Ltd v Young UNK113 ALR 39, have all been recognised as being sufficiently related to life or death …
If the event on which a benefit is payable is sufficiently life- or death-related then I can see no reason in principle why it should matter if that benefit is the same as that payable on another life- or death-related event. That is a matter for the insurer and it is well established that it is not necessary that the insurer should be exposed to any risk at all: Flood v Irish Provident Assurance Co Ltd (Note)ELR(1912) 2 Ch 597; NM Superannuation Pty...
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Winterthur Life UK Ltd
...decision: Pepper v Hart TAX[1992] BTC 591 Winterthur Life UK Ltd (formerly Provident Life Association Ltd)VAT(LON/95/1787) No. 14,935; [1997] BVC 2433 Land - Exempt supplies - Election to waive exemption - Disapplication of election - Grant by developer of land - Expectation that land would......