VATINS6040 - Supplies of insurance and related services outside the UK: the Specified Supplies Order

The original Value Added Tax (Input Tax) Specified Supplies Order 1992 (since replaced by the 1999 order) came into effect at the same time as the original Place of Supply of Services Order. The intention of the order was to maintain the right to the recovery of input tax on certain previously zero rated supplies which would otherwise have been lost following the implementation of the Place of Supply of Services Order.

The Specified Supplies Order was amended with effect from 1 March 2019, as an anti-avoidance measure, to restrict input tax recovery for intermediary services supplied to insurers belonging outside the UK where the party to be insured belongs in the UK.

With effect from 1st January 2021 the Specified Supplies Order was amended to extend the exempt with recovery VAT treatment, to specified supplies made to customers in the EU.

The relevant extract from the order is as follows:

“1. This Order may be cited as the Value Added Tax (Input Tax) (Specified Supplies) Order 1999 and shall come into force on 1 January 2000 and shall have effect for supplies made on or after that date.

2. The supplies described in articles 3, 3A and 4 below are hereby specified for the purposes of 26(2)(c) of the Value Added Tax Act 1994.

3. Services-

(a) which are supplied to a person who belongs outside the UK;

(b) which are directly linked to the export of goods to a place outside the UK; or

(c) which consist of the provision of intermediary services within the meaning of item 4 of Group 2, or item 5 of Group 5, of Schedule 9 to the Value Added Tax Act 1994 in relation to any transaction specified in paragraph (a) or (b) above,

provided the supply is exempt, or would be exempt if made in the United Kingdom, by virtue of any item of Group 2, or any of items 1 to 6 and item 8 of Group 5, of Schedule 9 to the Value Added Tax Act 1994.

3A. Any services that are included within article 3 above by virtue of the fact that the supply is exempt, or would have been exempt if made in the United Kingdom, by virtue of item 4 of Group 2 of Schedule 9 to the Value Added Tax Act 1994 must be related to an insurance transaction or a reinsurance transaction where the party to be insured under the contract of insurance or reinsurance (whether or not a contract of insurance or reinsurance is finally concluded) is a person who belongs outside the United Kingdom.

4.[INVESTMENT GOLD]

…”

For supplies made prior to 1st March 2019 article 3A should be disregarded.

For supplies prior to 1st January 2021, the specified supplies order applied for services supplied to persons belonging outside the UK and the EU.

Section 26(2) (c) confers the right to input tax recovery on these ‘specified supplies’.