WTGIL Limited v The Commissioners for HMRC

For VAT, the insurance exemption extends to related services supplied by insurance brokers or agents where those services are integral to the insurance transaction and performed in an intermediary capacity. In telematics insurance, providing and fitting the device must not be artificially separated from the insurance service. Under Item 4 of Group 2 of Schedule 9 to Value Added Tax Act 1994, the service may constitute preparatory work or assistance in administering and performing the insurance contract, even where fitting occurs after the policy is concluded. VAT exemptions are construed strictly, but not restrictively. The appeal was dismissed.

The appellant, formerly Ingenie Limited, was the representative member of a VAT group. Its subsidiary supplied and fitted electronic devices to vehicles insured under specialised telematics motor insurance policies. It claimed recovery of input tax on the devices and fitting costs.

The First-tier Tribunal rejected the claim, holding that there was no supply of goods for consideration and no deemed supply: [2022] UKFTT 131 (TC). The Upper Tribunal held that there was a supply of services to policyholders, but that it was not made for consideration, and rejected the exemption argument: [2024] UKUT 00077 (TCC); [2024] STC 830.

On second appeal, the central issue was whether providing and fitting the devices constituted exempt insurance-intermediary services under Group 2 of Schedule 9 to Value Added Tax Act 1994.

Disposition

The Court of Appeal unanimously dismissed the appeal. Sir Launcelot Henderson delivered the judgment, with which Nugee LJ and Popplewell LJ agreed.

1. In analysing supplies made within a network of contractual arrangements, the court must consider the contractual documents together with the totality of the circumstances and the whole relationships between the parties. The approach in Secret Hotels2 Ltd v Revenue and Customs Commissioners [2014] UKSC 16; [2014] STC 037 was applied.
2. VAT exemptions must be strictly construed, but not restrictively. The interpretation must respect fiscal neutrality and must not deprive the exemption of its intended effect. The court applied the principle stated in Future Health Technologies Ltd v Revenue and Customs Commissioners Case C-86/09; [2010] STC 1836.
3. The provision and fitting of the devices were integral and essential features of the specialised insurance. They were related services performed by an insurance intermediary and fell within article 135(1)(a) of the Principal VAT Directive and Item 4 of Group 2 of Schedule 9 to Value Added Tax Act 1994.
4. Under Note (1), the services fell within work preparatory to the conclusion of insurance contracts or, alternatively, assistance in their administration and performance. The fact that fitting occurred after the policy was concluded did not prevent the services from being preparatory to the proper functioning of the insurance. ISL acted in an intermediary capacity because provision and fitting formed part of its contractual activities between the insurer and the insured.
5. The same services were supplied to the insurers as well as to policyholders, since ISL performed the insurers’ contractual obligation to provide the devices. Treating the services as supplied only to policyholders and outside ISL’s intermediary capacity would be artificial. The exemption provided a complete answer, so the consideration issues and the alternative grounds were not determined.

1. Court of Appeal (Civil Division): appeal dismissed: [2025] EWCA Civ 399.
2. Upper Tribunal (Tax and Chancery Chamber): appeal dismissed: [2024] UKUT 00077 (TCC); [2024] STC 830.
3. First-tier Tribunal (Tax Chamber): the appellant’s input-tax claim was rejected after findings that there was no supply of goods for consideration and no deemed supply: [2022] UKFTT 131 (TC).