Guarantee Protection Insurance Limited v Commissioners for Her Majesty's Revenue and Customs

Decision date: 20 May 2011

Neutral citation: [2011] UKFTT 343 (TC)

Overall AI summary confidence: high

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Short overview

This short overview is intended to summarise the case, issues and outcome so far as they are supported by the judgment.

AI confidence in this short overview: high

This appeal concerned whether 12.5% "Guarantee Premiums" charged under a scheme (GACS) were premiums "received under" the appellant's taxable insurance contracts for IPT purposes, or otherwise charged to the insured or received on the insurer's behalf so as to be caught by s.72(1A) or s.72(7) of Finance Act provisions. The Tribunal found the 12.5% sums were created and diverted by intermediaries without the insurer's authorisation and therefore were not payments received under the appellant's contracts, nor charged in connection with those contracts or received on the appellant's behalf. The appellant's appeal was allowed and the assessment set aside as to the contested amount.

Ratio decidendi

This summary is intended to identify the ratio decidendi, meaning the legal reasons for deciding and the binding part of the decision.

AI confidence in this ratio decidendi summary: medium

Where an intermediary or supplier creates and diverts sums by a contrived arrangement without the insurer's authorisation, those sums are not to be treated as premiums "received under" the insurer's taxable insurance contracts, and statutory deeming in s.72(1A) and s.72(7) requires a real connection or actual receipt on behalf of the insurer; a contrived charge lacking the insurer's authorisation will not be caught.

Obiter dicta

This summary is intended to identify obiter dicta, meaning observations made by the way that were not necessary to deciding the case and are not binding.

AI confidence in this obiter dicta summary: medium

The Tribunal observed that accepting HMRC's broader argument would risk making IPT impracticable in similar distribution arrangements and noted the GACS measure appeared artificial and likely designed to shift VAT liability, though not treated as a total sham.

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