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HMRC internal manual

VAT Insurance

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HM Revenue & Customs
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Administration services: pension fund administration services

There have been two cases in this area both involving the insurer Winterthur Life UK Ltd (Winterthur).

Winterthur 1

This case concerned the administration of Winterthur’s self-invested personal pensions by administration companies within the Winterthur VAT group. We argued that the companies’ services were not exempt because they were not permitted insurers and pension fund management services were only exempt when provided by permitted insurers (this case was heard before the ECJ gave its judgment in CPP - see VATINS7010).

The Tribunal found that the services were part and parcel of a supply of insurance by Winterthur Life and were exempt under item 1 to Group 2.

Winterthur 2

This case concerned services supplied by one of the two Winterthur fund administration companies involved in Winterthur 1, PPM, to Scottish Equitable; an insurance company outside the Winterthur VAT group. The services included:

  • carrying out data and investment administration;
  • dealing with queries from members;
  • processing Equitable’s application forms and other paperwork;
  • preparing Inland Revenue returns;
  • record-keeping;
  • recording and banking monies into an account of which it was an authorised signatory; and
  • operating a help line, which it answered as Scottish Equitable.

The pension scheme itself was divided into two separate parts: the so-called ‘insured’ part (where contributions were invested in a common fund), and the optional self invested part (where the member used an investment adviser to choose how investments were made in a personal fund). PPM administered only the self-invested part of the scheme; they had no involvement at all in the ‘insured’ part of the scheme.

Winterthur argued that PPM’s services fell within Item 4 to Group 2 as the administration of contracts of insurance and not Item 1 as was found in the first appeal.

The tribunal found that the pension scheme provided by Scottish Equitable taken overall was a single supply of insurance because (applying CPP principles - see VATINS7120) the ‘insured’ part of the scheme was the principal element to which the self-invested part was ancillary.

As a consequence, the tribunal accepted Winterthur’s argument that PPM’s services fell within item 4 (that is, that they were insurance agents and their services were related to insurance).