Insurance intermediaries and agents

By Tolley
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The following Value Added Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Insurance intermediaries and agents
  • Who is an agent or intermediary?
  • Insurance related services
  • Introductory services
  • Providing assistance
  • Claims handling
  • Collecting premiums
  • Expert services
  • Pension review services
  • Telephone helpline and phone sales
  • Internet
  • Protection and Indemnity Club manager and agents (P&I Club)
  • Run-off business
  • Broker management funds
  • Anti-avoidance ― international transactions

This guidance note provides an overview of the VAT rules relating to supplies made by insurance intermediaries and agents. This note should be read in conjunction with the Insurance overview and Insurance ― specific transactions guidance notes.

VATA 1994, Sch 9, Group 2, item 4, Note 1; De Voil Indirect Tax Service V4.123 (subscription sensitive); 2006/112/EC , Art 135(1)(a); 2008/08/EC ; VATINS2000, VATINS5000; VAT (Input tax) (Specified Supplies) Order 1999, SI 1999/3121; HMRC Notice 701/36 
Who is an agent or intermediary?

An insurance agent is not defined in either the UK or EU legislation.

VATINS5000, VATINS1000, VATINS5220; InsuranceWide.com Services Ltd v Revenue and Customs Commissioners [2010] STC 1572 (subscription sensitive); Insurance Intermediaries and Meerkats ― De Voil Indirect Tax Intelligence, 172 (29) (subscription sensitive)

HMRC gives the following definition in its guidance:

“For the purposes of the VAT exemption HMRC recognise, that an insurance agent might be anyone who provides insurance related services in an intermediary capacity. An agent could be a tied agent who sells insurance as his main business or, for example, a typical high street retailer or a car dealer arranging insurance to cover the goods they sell. Whereas an insurance broker usually acts for the insured, an agent may act for the insurer, the insured or both. The definition of an insurance agent, therefore, is fairly wide.”

In HMRC Notice 701/36 , para 9.1.1, HMRC provides the following definition:

  • insurance broker ― normally acts for the insured person or person seeking insurance in negotiating a contract of insurance on their behalf
  • insurance agent ― this person is normally tied to a particular insurance provider and arrange and administer their policies

If an insurance broker or agent makes the following supplies, they will be exempt

More on Exempt supplies: