WTGIL Limited v The Commissioners for His Majesty’s Revenue and Customs

The Court of Appeal considered whether the provision and fitting of telematics "Devices" in vehicles as part of a specialised motor insurance product were taxable supplies or exempt insurance intermediary services for VAT purposes. Applying the Principal VAT Directive (in particular Article 135(1)(a)) and the domestic implementation in the Value Added Tax Act 1994 (Schedule 9 Group 2, Items 1 and 4 and accompanying Notes), the court held that the provision and fitting services formed related services performed by an insurance intermediary and were therefore exempt from VAT. The court emphasised the need to consider the arrangements and contractual documents as a whole (following the approach in Secret Hotels) and concluded that ISL acted in an intermediary capacity when providing and fitting the Devices. Because the supplies were exempt, the appellant’s claim to recover input tax failed and the appeal was dismissed.

This appeal concerned a claim by Ingenie (WTGIL Limited as representative member) for recovery of input VAT paid on the purchase and fitting of telematics "Devices" supplied and fitted by Ingenie Services Limited (ISL) to policyholders under telematics motor insurance policies for younger drivers. Ingenie submitted an Error Correction Notice seeking a refund of £2,084,149 for VAT periods 07/14 to 07/18 inclusive on the basis that ISL’s supplies of provision and fitting of Devices were taxable supplies of services (or goods) to policyholders for consideration and therefore input tax was deductible under Article 168 of the Principal VAT Directive. HMRC rejected the ECN and the matter proceeded through the First-tier Tribunal and the Upper Tribunal, both of which declined Ingenie’s claim; permission for a second appeal to the Court of Appeal was granted.

The principal issues before the Court of Appeal were:

• (i) whether the supply of the provision and fitting of the Device constituted a supply of services (not goods) to policyholders;
• (ii) whether such services were supplied for consideration (either non-monetary consideration in the form of entering into the insurance contract or monetary consideration); and
• (iii) whether the services fell within the exemption for "insurance and related services" performed by insurance brokers and agents, as implemented by Schedule 9 Group 2 Item 4 VATA 1994 and Notes (1) and (2).

The court reviewed the contractual documentation (the Covea Business Agreement, the Policy Booklet, the Terms of Business Agreement and the Third Party Administrator Agreement), the factual findings of the tribunals below, and the applicable EU and domestic VAT law. Applying the holistic contractual approach endorsed in Secret Hotels, the court found that the provision and fitting of the Device were integral and indispensable elements of the telematics insurance product and were performed by ISL in the course of acting as an intermediary between insurer and insured. The services fell within Note (1)(b) and/or (1)(c) (work preparatory to conclusion of contracts and assistance in administration/performance) and within Note (2) (acting in an intermediary capacity). Because the services were therefore exempt under Item 4, the appeal was dismissed and the Court did not consider the parties' arguments on the existence or valuation of consideration.

This was an appeal: the appeal is dismissed. The Court held that the supply by ISL of the provision and fitting of telematics Devices formed related services performed by an insurance intermediary and were therefore exempt from VAT under Item 4 Group 2 Schedule 9 VATA 1994 read with Article 135(1)(a) of the Principal VAT Directive. The court reached this conclusion by analysing the contractual arrangements as a whole and finding that the Device provision and fitting were integral and indispensable to the telematics insurance and were supplied by ISL in the course of acting in an intermediary capacity. As the supplies were exempt, Ingenie’s input tax recovery claim failed and there was no need to decide the separate questions about consideration or deemed supplies.

FTT (Tax Chamber) decision: [2022] UKFTT 131 (TC) (appeal by Ingenie); Upper Tribunal (Tax & Chancery Chamber) decision: [2024] UKUT 00077 (TCC), appeal dismissed; permission for a second appeal to the Court of Appeal was granted and the present appeal was dismissed by the Court of Appeal ([2025] EWCA Civ 399).