VATINS5730 - Services of insurance intermediary: Insurance supplied with other goods and services -Legal notes (3)-(5): Manner of disclosure

We have always maintained that disclosure should be made by way of a monetary amount.However, this view was not upheld by the House of Lords in the case of C R Smith.

C R Smith (Dunfermline) Ltd

C R Smith supplied insolvency insurance with double-glazing. The charge to the customer included the price of the double-glazing with the cost of the premium and their policy administration/arrangement services carved out of the overall cost.

The contract with the customer stated that “where the sale exceeds £1000, an insurance policy is in place and incorporated in the contract price are costs incurred for the making and arranging of the policy with the necessary support and administration of 10%”. We argued that showing a percentage figure rather than a monetary amount did not meet the disclosure requirements.

The Lords decided that the imposition of the requirement in the manner argued by Customs (now HMRC) was disproportionate to the anti-avoidance objective of the measure, although the judgment did not go so far as to find the disclosure provisions themselves ultravires.

The decision of the House of Lords overturned the decisions in the Tribunal and Court of Session which had previously been found in our favour.

Please contact Financial Services (VAT and IPT) Team if you come across a case involving the manner of disclosure under legal note (4).