Exemption ― insurance ― brokers and agents

Produced by Tolley

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

  • Exemption ― insurance ― brokers and agents
  • Who is a broker or agent?
  • Intermediary services
  • Introductory services
  • Claims handling
  • Collecting premiums
  • Expert services
  • Telephone helpline and phone sales
  • Helpline services
  • Phone sales
  • More...

Exemption ― insurance ― brokers and agents

IP COMPLETION DAY: 11pm (GMT) on 31 December 2020 marked the end of the Brexit transition / implementation period entered into following the UK’s withdrawal from the EU. At this point in time, key transitional arrangements came to anend and significant changes began to take effect across the UK’s VAT and customs regime. This document contains guidance on subjects potentially impacted by these changes. Before continuing your research, see the Brexit — overview guidance note.

VATA 1994, Sch 9, Group 2, item 4 exempts the provision by aninsurance broker or insurance agent of any of the services of aninsurance intermediary in a case in which those services:

  1. are related (whether or not a contract of insurance or reinsurance is finally concluded) to aninsurance transaction or a reinsurance transaction

  2. are provided by that broker or agent whilst they are acting in anintermediary capacity

VATA 1994, Sch 9, Group 2, item 4, Note 1; De Voil Indirect Tax Service V4.123; VATINS2000, VATINS5000; VAT (Input tax) (Specified Supplies) Order 1999, SI 1999/3121; HMRC Notice 701/36

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

Who is a broker or agent?

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

HMRC gives the following definition in its guidance:

“For the purposes of the VAT exemption HMRC recognise, that aninsurance agent might be anyone who provides insurance related services in anintermediary 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 aninsurance broker usually acts for the insured, anagent may act for the insurer, the insured or both. The definition of

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