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Activity Feed Forums Rest of Europe United Kingdom (UK) PPI claims handler services not VAT exempt

  • PPI claims handler services not VAT exempt

    Posted by Kushal on 18 August 2021 at 11:34 am

    On the 16 August 2021, the UK UTT ruled that the activity of an insurance claims management company handling payment protection insurance (PPI) complaints is not VAT exempt under Article 135(1)(a) of the VAT Directive (i.e. the insurance claims handler was not acting as an insurance agent nor performing services related to insurance transactions).

    Background

    The issues in this case are whether the company’s services provided to its customers are exempt from VAT by virtue of being (1) insurance transactions or (2) services performed by an insurance agent related to insurance transactions.

    The company makes claims on behalf of individual customers who have been mis-sold payment protection insurance (‘PPI’) by financial institutions. When those claims are successful, compensation is paid to the Company’s customers in sums equivalent to the premiums they have paid to the financial institution for the mis-sold PPI plus interest. The Company receives a fee for its services, which is calculated as a percentage of the compensation paid to the customer by the financial institution.

    Decision

    The Company’s supplies to its customers were liable to VAT and do not benefit from the VAT exemption under the EU VAT Directive (2006/112/EC) because:

    (1) the supplies were not insurance transactions for the purposes of Article 135(1)(a) of the VAT Directive (and item 1 of Group 2 of Schedule 9 to the Value Added Tax Act 1994 (‘VATA’)); and

    (2) they were not services performed by an insurance broker or insurance agent that were related to insurance transactions and as such were not within the exemption under Article 135(1)(a) of the VAT Directive (nor item 4 of Group 2 of Schedule 9 to VATA).

    Read full decision here: Claims Advisory Group Limited v The Commissioners for HM Revenue and Customs [2021] UKUT 0199 (TCC)

    Kushal replied 2 years, 6 months ago 1 Member · 0 Replies
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