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HMRC internal manual

VAT Insurance

HM Revenue & Customs
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Services of an insurance intermediary: insurance brokers and insurance agents: insurance involving more than one broker or agent

It is possible for more than one party to become involved in procuring a specific supply of insurance. For example, an agent or small broker may need to use a broker with a significant presence in the market in order to place a particular risk, or the original broker (the producing broker) may use another broker who specialises in a particular class to place the business (the placing broker). Each agent or broker in the chain may claim the exemption for their supplies, provided the criteria set out in this guidance relating to exemption for intermediary services are met in relation to each supply.

The issues concerning chains of intermediaries were the subject of the ECJ judgement in JCM Beheer BV (C124/07). which found that intermediaries did not have to have direct contact with either the insurer or potential insured to qualify for exemption. In the judgement it states in paragraph 29 that:

the fact that an insurance broker or agent does not have a direct relationship with the parties to the insurance or reinsurance contract in the conclusion of which he has been instrumental, but merely an indirect relationship with them through the intermediary of another taxable person who is, himself, in a direct relationship with one of those parties, and to whom that insurance broker or agent is contractually bound does not prevent the service provided by the latter from being exempt from VAT under that provision.