VAT
VAT on black box insurance
WTGIL Limited (formerly Ingenie Limited) was set up to provide black box insurance to young drivers. It entered into agreements with a panel of insurers, marketed insurance through its own website and through price comparison websites, and engaged Ageas Retail Limited to administer the policies. Policyholders were required to have Ingenie’s telematics devices fitted to their cars, and the information from them would be used to monitor their driving behaviour and increase or decrease premiums accordingly.
Ingenie made a claim to HMRC to recover VAT incurred on purchasing the devices, which HMRC rejected on the basis that Ingenie was making exempt supplies of insurance intermediation services. The Upper Tribunal (UT) had considered that Ingenie was supplying services that were not exempt insurance intermediation services, but as there was no direct link between the services and any consideration provided by the policyholder, there was no taxable supply of services for consideration that entitled Ingenie to recover input tax.
The Court of Appeal has now held that, in providing and fitting the devices, Ingenie was making exempt supplies of insurance intermediation services. The Court referred to “the simple point that telematics car insurance is a form of motor insurance provided in return for an annual premium”, and that Ingenie was acting as an intermediary. This analysis was supported by the contractual terms and the statutory language of the VAT exemption. Accordingly, Ingenie’s appeal was dismissed, albeit for different reasons than its appeals were dismissed by the UT, and the First-tier Tribunal.
WTGIL Limited v HMRC [2025] EWCA Civ 399
From the Weekly VAT News dated 14 April 2025, published by Deloitte
Application of TOMS to ride-hailing services
The Upper Tribunal (UT) has agreed with Bolt Services UK Limited (Bolt) that Bolt should account for VAT under the tour operators’ margin scheme (TOMS) on the supply to passengers of private hire vehicle ride-hailing services, upholding the First-tier Tribunal’s (FTT’s) decision.
The FTT had held that the supply was a service commonly provided by tour operators or travel agents. On appeal, HMRC argued that the FTT’s ‘high-level’ approach when considering whether services are of a kind commonly provided by tour operators/travel agents was wrong. HMRC considered that the correct approach was to ask whether the supply by Bolt in particular was identical or comparable to services supplied by tour operators/travel agents. HMRC also contended that the supply was materially altered or an ‘in-house’ supply, combining bought-in services (drivers) with Bolt’s own resources (the app platform), and therefore outside the scope of TOMS.
The UT acknowledged that while TOMS was designed for traditional tour operators, its scope is not limited to them, and that the key factor is the nature of the services provided, not the classification of the provider. The UT agreed with the FTT that a ‘high-level’ approach to comparing Bolt’s services with those of traditional operators was appropriate. Addressing HMRC’s argument that the supply was ‘in-house’, the UT considered that the drivers’ services directly benefited passengers, not Bolt, and were not materially altered or an in-house supply. Accordingly, the UT found that the supply was comparable to those of traditional tour operators/travel agents and was provided for the direct benefit of travellers, satisfying the key requirements of TOMS, and dismissed HMRC’s appeal.
HMRC v Bolt Services UK Ltd [2025] UKUT 100 (TCC)
From the Weekly VAT News dated 31 March 2025, published by Deloitte
VAT and alternative providers of higher education
St Patrick’s International College Limited and two other institutions providing higher education argued that their supplies of education services should be VAT exempt under the direct effect of the EU Principal VAT Directive (PVD) or the Value Added Tax Act 1994 (VATA). The institutions were alternative providers (APs) which, unlike higher education institutions (HEIs) and further education corporations (FECs), are not included in VATA as ‘eligible bodies’ entitled to VAT exemption. HMRC considered that exemption did not apply, and the Upper Tribunal (UT) has agreed with HMRC.
The institutions would be able to rely on the direct effect of the PVD if its implementation in the UK breached fiscal neutrality. However, agreeing with the FTT, the UT found that the UK was entitled to treat APs differently from HEIs and FECs, given the different regulatory regimes that applied, and that there had been no breach of fiscal neutrality. The institutions also argued that the consideration payable for their services (fees were mostly funded by student loans) was “ultimately a charge to funds provided by the Secretary of State”, and therefore exempt under VATA. The UT rejected this argument, on the basis that a loan to a student was not consideration for the supply of education, and that at the time of supply it was not known whether the student would repay the loan.
Finally, one of the institutions was an ‘eligible body’ with respect to its teaching of English as a foreign language (TEFL). The UT concurred with the First-tier Tribunal’s (FTT’s) finding that exemption applied to the supplies of TEFL, but did not extend to all the educational/training services supplied. Accordingly, the UT rejected all the institutions’ arguments, and refused their appeal against the FTT’s decision.
St Patrick's International College Limited & Ors v HMRC [2025] UKUT 101 (TCC)
From the Weekly VAT News dated 31 March 2025, published by Deloitte
Practical Points
Every month, the Tax Faculty publishes short, practical pieces of guidance to help agents and practitioners in their day-to-day work.
