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HMRC internal manual

VAT Insurance

Insurance with other goods and services: Single and Multiple Supplies: Points to consider for single or multiple supplies

Based on the tests laid down by the ECJ in CPP and subsequent court cases that have based their findings on the CPP judgment and expanded upon the basic principles, the points to consider when deciding on single or multiple supplies are as follows:

  • what does the contract/invoice show? How is the package described? (although it is important to bear in mind that the paperwork can be drawn up to indicate the VAT position the business wishes to achieve and may not reflect the true position);
  • what does the customer actually believe they are getting?
  • how is the package advertised?
  • how is the package priced? Are there separate charges or one overall price?
  • is the price reduced if one or more of the components is not included in the package?
  • are one or more of the components incidental to other components? That is, does it assist with the enjoyment of other components rather than constituting an aim in itself?
  • are all the components compulsory or is the provision of some or all of them optional?
  • are any of the components integral to others or can some of all of them be supplied separately?
  • are any of the components clearly more dominant in terms of value (either monetary or importance to the customer)? and, particularly relevant to insurance,
  • are the components within a package all supplied by the same supplier?

Where, therefore, you have a package made up of insurance with something else, the insurance will be a separate supply where it is:

optional; constitutes an aim in itself for the customer; and has a clearly defined (and disclosed – see VATINS5700) consideration charged inaddition to the charge for the other supply/ies and the overall cost to the customer is reduced by that amount should the insurance option not be taken.