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HMRC internal manual

VAT Insurance

Services of an insurance intermediary: insurance brokers and insurance agents: general

There is no definition of either or insurance agent within UK or EC VAT law. Whereas the profession of an insurance broker is well recognised, however, this is not so true of an insurance agent and this can sometimes cause problems.

For the purposes of the VAT exemption HMRC recognise, that an insurance agent might be anyone who provides insurance related services in an intermediary capacity. An agent could be a tied agent who sells insurance as his main business or, for example, a typical high street retailer or a car dealer arranging insurance to cover the goods they sell.

Whereas an insurance broker usually acts for the insured, an agent may act for the insurer, the insured or both. The definition of an insurance agent, therefore, is fairly wide.

In order for the services of either an insurance broker or agent to be exempt from VAT, however, the following criteria must be met:

  • the broker or agent must be acting in an intermediary capacity (see VATINS5220); and
  • their services must be insurance related (see VATINS5240).

Introducing insurance business is a regulated activity under the Insurance Mediation Directive (see VATINS5120). The FSMA requires introducers to be registered with the Financial Conduct Authority (FCA) as Introducer Appointed Representatives (IARs). IARs are not subject to the full FCA regime that applies to Appointed Representatives (ARs).