BB/11A/05 VAT—judgment of the ECJ in the case of Arthur Andersen & Co Accountants (C-472/03)
Business Brief, Issue 11. 18 May 2005
On 3 March 2005, the ECJ released its judgment in the case of Arthur Andersen. This Business Brief article outlines the findings of the Court, details how HM Revenue & Customs (HMRC) interpret these findings in relation to the current UK VAT exemption for insurance-related services and explains the position for businesses that consider they may be affected by the judgment.
The case, which was referred to the ECJ by the Netherlands Supreme Court, concerned the VAT liability of certain “back office” services provided by Andersen Consulting Management Consultants (ACMC) to a life insurance company. ACMC used qualified personnel to undertake most of the activities related to insurance on behalf of the insurer including the issuing, management and cancellation of policies, the management of claims and, in most cases, taking decisions that bound the insurer to enter into insurance contracts.
The question put to the ECJ was whether such “back office” activities carried out for an insurance company were exempt from VAT under art 13B(a) of the Sixth Directive as “related services