Court of Appeal victory for price comparison websites

Two companies operated websites, by which prospective customers were provided with a ‘comparison service’ for insurance cover from various insurers. They received commission from the insurers to whom they introduced clients.

They treated their supplies as exempt from VAT on the basis that they were insurance intermediaries and did not register or account for VAT. HMRC issued a ruling that the companies were not within the definition of an ‘insurance agent’ partly on the basis that there was no negotiation with customers – rather the websites provided click through services.

HMRC therefore ruled that they were required to register for VAT and account for output tax on their supplies.

The companies appealed, contending that they were acting as ‘insurance intermediaries’ and that their supplies qualified for exemption. The Chancery Division accepted this contention and allowed the appeal, and the Court of Appeal upheld this decision. On the evidence, the companies were providing services which were characteristic of an insurance broker or agent, and which were vital to the process of introducing those seeking insurance with insurers. Accordingly, the supplies qualified for exemption.