Insurance with other goods and services: insurance supplied by insurers with other goods or services: fidelity insurance supplied with reference enquiry services
Fidelity insurance is taken out to protect one party against loss due to the dishonesty or failure of another. For example, an employer may take out such insurance to protect against the dishonesty of an employee.
If an insurer provides only insurance cover, then the supply of insurance is exempt from VAT in the normal way.
Reference enquiries are often carried out under a fidelity insurance contract. These enquiries are normally carried out for the benefit of the insurer and are used to assess the risk involved.
If an insurer reserves the right to make a reference enquiry wholly for the purpose of the control of the risk, then such enquiries would normally constitute an overhead of the insurer, rather than a separate supply of reference enquiry services to the insured.
Where, however, an insurer is contracted to provide the customer with both VAT exempt insurance and standard rated reference enquiry services, then the supply rules outlined in VATINS7130 above will need to be applied.
Where an insurer subcontracts the reference enquiry to a third party, that person will be making a standard rated supply of services to the insurer.