WTGIL LIMITED v THE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMS [2024] UKUT 00077 (TCC)
| Jurisdiction | UK Non-devolved |
| Judge | Mr Justice Adam Johnson,Judge Thomas Scott |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Published date | 26 March 2024 |
Neutral Citation: [2024] UKUT 00077 (TCC) Case Number: UT/2022/000101
UPPER TRIBUNAL
(Tax and Chancery Chamber)
The Royal Courts of Justice, Rolls Building, London
VALUE ADDED TAX - whether supply and fitting of “black box” device to cars as condition
of insurance policy was a supply of goods or services for consideration to holders of insurance
policies - whether supply was a deemed supply of goods
Heard on: 7 and 8 November 2023
Judgment date: 26 March 2024
Before
MR JUSTICE ADAM JOHNSON
JUDGE THOMAS SCOTT
Between
WTGIL LIMITED Appellant
and
THE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMS
Respondents
Representation:
For the Appellant: Hui Ling McCarthy KC and Benjamin Parker, instructed by RSM UK
Tax
For the Respondents: Peter Mantle, instructed by the General Counsel and Solicitor to His
Majesty’s Revenue and Customs
1
DECISION
INTRODUCTION
1. WTGIL Limited ( the “Appellant”) was formerly called Ingenie Limited (“Ingenie”). As
that was its name at the time of the events relevant to this appeal, and it was referred to by that
name in the decision under appeal, we shall refer to it below as Ingenie.
2. The appeal relates to the VAT treatment of certain supplies made by Ingenie Services
Limited (“ISL”). Since ISL was a member of the VAT group of which Ingenie was the
representative member, for VAT purposes those supplies were deemed to have been made by
Ingenie, which is why it is the appellant in this case.
3. The supplies related to a telematics device installed in cars as part of an insurance policy
underwritten by a third party. The device, sometimes known as a black box, captures and
transmits information about the way the car is being driven. Ingenie made a claim to HMRC
that the provision and fitting of the devices were taxable supplies made by ISL to policyholders,
so that Ingenie could recover the input tax attributable to such supplies. HMRC denied that
claim, and Ingenie appealed against that decision to the First-tier Tribunal (Tax Chamber) (the
“FTT”). In a decision released on 1 June 2022 (the “Decision”), the FTT dismissed Ingenie’s
appeal.
4. Ingenie appeals against the Decision.
BACKGROUND AND RELEVANT FACTS
5. References below in the form “FTT[x]” are to paragraphs of the Decision.
Background
6. The FTT helpfully summarised the background to the appeal before it as follows, at FTT
[3]-[5]:
3. ISL is an insurance intermediary which developed, marketed and sold
telematics car insurance (also known as black box insurance) aimed primarily
at 17 to 25 year olds. Ingenie and ISL are not insurers and the policies were
underwritten by insurers from a panel appointed by ISL. As a condition of the
insurance, a telematics device (the ‘Device’) must be fitted to the
policyholder’s car within ten days of the commencement of the policy. ISL
agrees to provide the Device and fit it or arrange for it to be fitted. The Device
captures and transmits information about the way the car is being driven, eg
acceleration and deceleration/braking, cornering, speed, distance travelled,
date and time of travel and location. ISL then collects and analyses the
telematics data from the Device and provides an analysis of the policyholder’s
driving proficiency to the policyholder and to the insurer. The purpose of
providing such data is to enable the policyholder to improve their driving and
thus obtain cheaper car insurance. The data provided by ISL to the insurer
allows it to monitor the policyholder’s driving behaviour and to increase or
decrease the premium accordingly.
4. On 30 August 2018, Ingenie made a claim by way of Error Correction
Notice for a refund of £2,084,149 input tax incurred in relation to the provision
and fitting of Devices in the VAT periods 07/14 to 07/18. The claim was based
on the view that the provision and fitting of Devices were taxable supplies
made by ISL to the policyholders, whether or not for consideration, and the
input tax was attributable to such supplies.
2
5. In an undated letter sent on 25 July 2019, the Respondents (‘HMRC’)
rejected the claim. HMRC decided that there was no contract under which ISL
supplied the Device to the policyholders for consideration. HMRC took the
view that the only consideration for ISL’s supplies of providing and fitting the
Device and any subsequent data analysis was the commission paid to ISL by
the insurer which was consideration for an exempt supply of insurance
intermediary services. Accordingly, any input tax relating to the Device was
directly linked to an exempt supply by ISL and not deductible. HMRC also
considered that charges in relation to the fitting of a new Device when the
policyholders changed their car were either additional premium charged by
the insurer or consideration for an exempt supply by ISL.
FTT’s findings of fact
7. The only witness before the FTT was Luke Proctor-Wilson, for Ingenie, who was an
employee of Ingenie. The FTT found him to be a credible witness and accepted his evidence
of fact: FTT[14].
8. In summary, the FTT made the following findings of fact material to this appeal, at
FTT[17]-[34]:
(1) The “telematics offering” was aimed particularly at new and inexperienced drivers
aged 17 to 25 (“policyholders”), to enable them to obtain more affordable car insurance.
The Devices were installed in the policyholders’ cars and transmitted data about their
driving to ISL, which was the customer-facing entity. ISL analysed the data and reported
to insurers to enable them better to assess risk, both during the policy and on any renewal.
(2) ISL entered into contracts (“Broker Agreements”) with insurers under which ISL
arranged and administered insurance policies which required the use of the Device. It
was agreed that a representative Broker Agreement would be that dated 27 November
2013 with Covea Insurance plc (“Covea”) (the “Covea Business Agreement”).
(3) ISL sub-contracted the performance of its services to Ageas Retail Limited
(“ARL”) under the “Third Party Administrator Agreement”.
(4) The ISL website contained information about the Device, and stated that there was
no additional cost for a Device as it was included in the amount paid for the insurance.
(5) Customers entering into a telematics insurance policy on the website accepted a
Terms of Business Agreement (“TOBA”) and Insurance Product Information Document
(“IPID”).
(6) ARL collected the insurance premium. Once the premium had been collected, ISL
became entitled to the commission specified in the Covea Business Agreement. This
provided that Covea would pay ISL commission for each policy, calculated as 10% of
the premium, excluding insurance premium tax, plus £150 for the Device fitted to the
policyholder’s car. Where the policyholder already had a working Device fitted by ISL
(for instance, on renewal) the £150 was not payable.
(7) Once a driver had entered into the policy, ISL would send various documents to
the policyholder. These included the TOBA and the “Policy Booklet”. The FTT was
shown Policy Booklets from 2013, 2015 and 2017. There were no material variations in
the wording of those documents.
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