This case concerned the VAT liability of optional third party insurance supplied to self-employed taxi drivers together with car hire. The Appellant had treated this as exempt but HMRC ruled that this was taxable and assessed them for £66,859.
The Appellant provided a radio support service to about 280 self-employed taxi drivers. They were charged £120 a week for the car and radio facilities, and a further £45 a week was charged if the drivers wanted to take third-party liability cover through the company.
The taxpayer argued that the £45 was an exempt supply of insurance linked to a block cover policy taken out with an insurance company (VATA 19944, Sch 9 group 2). HMRC claimed it was one element of a multiple-supply that should be treated as standard rated: the taxpayer was “not an insurer or an intermediary” and therefore the charges it made to drivers could not be insurance.
