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HMRC internal manual

VAT Insurance

Services of an insurance intermediary: introductory services: call centre selling insurance

TeleTech UK Ltd

TeleTech provided call centre and IT support services to a wide range of clients, describing themselves as a “customer management solutions” company. The appeal related to the services they supplied to an insurance company. TeleTech cold called people using contact lists provided by the insurer and attempted to sell them health insurance products using scripts. The products were very straightforward and required no specific insurance expertise from the telephone operatives who were selected for their expertise in call handling and selling. Only a small percentage of calls led to sales and TeleTech was paid on a flat fee rather than commission basis.

We argued that TeleTech’s services did not fall within the exemption for insurance related services on the basis that they were advertising/promotional type services which are specifically excluded from the exemption. The Tribunal allowed the appeal on the grounds that TeleTech was selling, or trying to sell, insurance policies as agents. The decisive factor being that, where calls led to sales, TeleTech was able to put the insurer on risk and the customer on cover. The Chairman also observed that the manner of remuneration (i.e. whether by flat fee or commission) had no bearing on the VAT treatment.

HMRC decided not to appeal the decision.

Following the Teletech decision it is accepted that if the supplier was able to put the insurer on risk at the point of sale his supply was likely to be exempt, even if the other tests in VATINS5310 were not met. However the Andersen Judgment makes it clear that the ability to put the insurer on risk is not determinative. You should therefore consider the nature of the supply as a whole and follow the guidelines given in the Andersen Judgment to help you decide whether the supplier is an insurance intermediary.