VAT Upper Tier Tribunal Decision – WTGIL Ltd (formerly Ingenie) v HMRC ([2025] EWCA Civ 399).
This case looks at the VAT impact for businesses involved in Insurance Brokerage, Intermediary Services or Embedded Technology within the delivery of those services.
It involved the VAT treatment of services related to ‘black boxes’ which are usually marketed to young drivers. They track driving behaviour which directly influences the insurance premiums offered by the insurer.
WTGIL Ltd. was part of a group structure. WTGIL Ltd was the representative member, resulting in all VAT matters going through this company.
Ingenie Services Ltd. (ISL) was the operational company who supplied the devices, arranged fitting, collected and analysed the data, and passed this data to the insurer. They had treated this as a VAT exempt insurance intermediary service, with no output tax charged or input tax reclaimed.
However, as the representative member, WTGIL Ltd submitted a £2m VAT refund claim in 2018 claiming that the supply of devices was a taxable supply. As such there would be the ability, they argued, to recover VAT on the costs they incurred in making this supply.
HMRC rejected this claim, with the view that this was a single, exempt supply of insurance intermediary services.
It transpired that both the First Tier and Upper Tribunals have upheld HMRC’s view.
The ruling confirmed that provision and installation of the black boxes were an exempt service supply by an insurance intermediary party as per VATA 1994 Schedule 9, item 4.
Their view was that there was no supply for consideration to the policyholders (monetarily or non-monetarily), resulting in no recoverable input tax on the devices’ cost and installation. They emphasised the view that their role was intermediary between the insurer and the insured.
Implications
For those businesses with services linked to arrangement and administration of insurance policies, it should be noted that these may qualify as exempt regardless of any tangible goods or technology involved. Disaggregation of devices and services is unlikely to succeed in reclaiming input tax unless there is a distinct taxable activity with clear consideration received for this element.
If a business provides services which include tracking apps or devices, the VAT liability must be considered across the package as a whole, not just the individual parts. The courts consider the economic reality and not how they can be split into parts on paper, therefore tech with insurance may still be fully VAT exempt.
There will be situations where a business may be making mixed supplies i.e. taxable and exempt, and in those instances clear apportionment methods will need to be implemented to protect input tax recovery.
It is crucial to ensure that businesses are prudent when describing services in customer contracts and policy booklets, including subcontract documentation with service providers. If services are bundled this will result in a difficult process to classify parts at differing VAT rates.
It is worth noting that the collection and analysis of data was agreed to fall outside the scope of the appeal, therefore no ruling was made on the VAT treatment of the data services specifically. It’s a factor within the complex world of VAT that bundling these services, as an overall service, may share the same VAT treatment and if charged separately may attract different VAT rates.
Whenever VAT gets complicated for your organisation, do get in touch with your Xeinadin Indirect Tax team. Help is only an email away [email protected].
