Revenue

Under the taxpayers scheme, clients were, for a fee, indemnified against costs and expenses following loss or theft of credit cards, etc.

A block policy...Under the taxpayers scheme, clients were, for a fee, indemnified against costs and expenses following loss or theft of credit cards, etc.

A block policy taken out by the taxpayers with an insurance company covered the risks indemnified against.

The scheme also included various other services such as the computerised registration of credit cards.

The taxpayers were assessed to value added tax on the fees charged.

They challenged the assessment, claiming that their scheme wholly or mainly comprised insurance...transactions under art 13(B)(a) of the Sixth Council Directive 77/388/EEC and s.17(1) of and Group 2 of Sch.6, to the 1983 Act and were accordingly exempt from tax.

On the taxpayers appeal and the commissioners cross-appeal from Popplewell J.

the Court of Appeal held that the taxpayers scheme involved a single supply of a card registration service and that the supply of insurance was incidental to it.

The taxpayers appealed, and the House of Lords referred questions to the European Court of Justice.

The court replied that insurance...transactions was broad enough in principle to include what was done by the taxpayers and that it was for the national court, in the light of criteria indicated, to determine whether the taxpayers transactions comprised two independent supplies an exempt insurance supply and a non-exempt card registration service or whether one of those was the principal supply and the other was ancillary to it so that it would receive the same tax treatment.

The appeal was heard further.Roderick Cordara QC and Perdita Cargill-Thompson, instructed by Hutchinson Mainprice, for the taxpayers.

Nicholas Paines QC and Peter Mantle, instructed by Solicitor, Customs and Excise, for the commissioners.Held, allowing the appeal, that the essential purpose of the taxpayers scheme was to provide insurance cover to their clients against financial loss arising from loss or misuse of credit cards and other possessions; that card registration and other services provided were ancillary to that main purpose; and that, accordingly, there was a principal exempt supply and ancillary supplies to be treated as exempt.

(WLR)