Commentary

V4.123A Exemption—insurance/warranties/guarantees supplied with other goods and services

Part V4 Exemption, zero-rating and reduced rates

V4.123A Exemption—insurance/warranties/guarantees supplied with other goods and services

V4.123A Exemption—insurance/warranties/guarantees supplied with other goods and services

Composite/multiple supplies

Difficulties may arise when a supply of insurance, or a purported supply of insurance, is sold together with other goods or services. In such cases, the following questions need to be addressed:

  1.  

    –     Is there a composite supply of goods or services other than insurance, to which the supply of insurance is ancillary1?

  2.  

    –     Is there a composite supply of insurance, to which other goods or services is ancillary2?

  3.  

    –     Are there multiple supplies of goods/services and insurance3?

The question of the nature of a supply was dealt with by the ECJ in Card Protection Plan Ltd v C & E Comrs4, where it was held that:

  1.  

    •     every supply must be regarded as distinct and independent, and a supply which comprises a single supply from an economic point of view should not be artificially split, so as to distort the functioning of the VAT system. With this in mind, the essential features of the transaction must be ascertained in order to determine whether the customer, being a typical customer, is being provided with several distinct principal supplies or with a single supply

  2.  

    •     there is a single supply in particular where one or more elements are to be regarded as constituting the principal service, while one or more elements, by contrast, are to be regarded as ancillary services which share the tax treatment of the principal service. A service must be regarded as ancillary to a principal service if it

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