Issue 1 : The definition of an agent both in domestic and in European law was considered by the Tribunal in the case of C & V (Advice Line) Services Ltd . At paragraph 54 Stephen Oliver (as he then was) said:
The tribunal then considered the European position and found that the concept there was wider. This conclusion was reached after considering the Insurance Intermediaries Directive (Council Directive 77/92) (the Sixth Directive itself having no definition of an insurance agent) and the cases of Century Life and Card Protection Plan in the European Court. However, we bear in mind that at this stage the cases of Arthur Andersen and Taksatorringen had not been decided. The tribunal stated at paragraph 57:
The Tribunal then went on to conclude that the appellant, C&V, was an agent for the purposes of the Sixth Directive.
In the case of Arthur Andersen the court only tangentially considered the concept of an agent and its conclusions are mainly negative. However it did (in reliance on the case of Taksatorringen ) state that it was required by case law for recognition as an insurance agent to have a relationship with both the insurer and the insured parties. The court described the activities of the appellant in that case as being in part 'the setting and payment of commission for insurance agents, the maintenance of contact with them, the handling of aspects relating to reinsurance and the supply of information to insurance agents and to the tax authorities' which, the court said, were 'quite clearly not part of the activities of an insurance agent'.
The court in Taksatorringen endorsed the words of the Advocate General's opinion in that case at paragraph 91 where he said:
It is therefore the opinion of the European Court that, contrary to the decision of the Tribunal in C&V , Directive 77/92 does require that to be an agent there must be a power to bind the insurance company, however the court left open the question of whether or not it was necessary to construe 'insurance agent' in the VAT Directive in the same way. Whilst that Directive is not determinative or definitive (as Mr Key acknowledged) in relation to interpreting the meaning 'an insurance agent' for VAT purposes, VAT concepts being separate and freestanding, we are nonetheless entitled to derive assistance from it, and, in particular, from the way the European court has viewed it, and we do so.
We have carefully considered all the different stages in the present case, and do not find that InsuranceWide was acting as an insurance agent at any stage either in the European or in the United Kingdom: at no stage did it have power to bind the insurance company, which is one of the indicia of an agent (see paragraph 45 of the case of Taksatorringen set out at paragraph 61 above). InsuranceWide at all times specifically disclaimed being an agent and in a letter dated 4 March 2005 sent to HMRC, BDO Stoy Hayward stated that InsuranceWide was 'entirely independent' and that its recommendations were 'solely based on the best insurer for that particular risk', which is what the evidence before us showed to be the case. It might be expected that an agent would not be so detached. In addition InsuranceWide did not have any role to play in negotiating the terms of any of the insurance contracts which eventuated. InsuranceWide itself sends out reminders to the insured parties when their insurance is due for renewal. These reminders are sent out in its own name, and the insured parties are invited to visit InsuranceWide's own website again. We can only conclude that this is in order that the insured might view other options and possibly renew with a different insurance company which we consider to be evidence that InsuranceWide was acting on its own behalf and not on behalf of the insurers, as an agent would. It also was presumably in InsuranceWide's mind that, whilst making such a return visit, the insured might click on one of the other banners or other companies' names thereby generating further income for InsuranceWide. We accept that what happens after a person seeking insurance has been directed through to the insurer's website and taken out a contract of insurance is only tangentially relevant, but we consider it powerful evidence that InsuranceWide was not acting as an agent on behalf of any of the insurers.
We have looked with particular care at the 'Cox period', when InsuranceWide was bound to refer people seeking insurance to the Cox panel of insurers, and where the terms of the agreement with Cox superficially make it appear to be an agent, but at that stage all that InsuranceWide was doing when people clicked on to its own website was to pass them through to members of the Cox panel of insurers, and it was no more than a conduit for those seeking insurance to reach the insurers. At that stage InsuranceWide was not holding discussions on a regular basis with the insurers as it did later on, and had no role beyond that of an introducer. In our view it was not doing sufficient to bring it within the concept of an agent. At the Decision-Tree phase, Mr Harrison said InsuranceWide was moving from acting as an agent for just one group of insurers to acting on behalf of the number of potential insurers "with the possibility of recommending one or more of a number of insurers". We have underlined recommending because we do not in fact understand from the rest of the evidence that that is what InsuranceWide was doing. It was weeding out those companies which would not meet the requirements of the potential insured, and was doing no more than offering up the names of insurance companies which might be able to meet his needs. There was no suggestion that any particular insurance company was being 'recommended', albeit the name of one company would be put forward above the names of three others. Indeed the companies' own terms and conditions, which are set out above, specifically state that InsuranceWide does not endorse the suitability of any insurance products or services as it might be expected an agent would. Whilst we acknowledge that a company's terms and conditions are not definitive of its tax status, nonetheless we consider it relevant in this case that InsuranceWide chose to describe its activities in the way that it did, and, in particular, that in October 2004 it specifically disclaimed acting as an agent for either the insurer or the person seeking insurance. We consider that to be an accurate description of its position.
Although the fact that we do not find InsuranceWide to be at any stage an insurance agent, either under the Directive or the national legislation, and therefore that is sufficient to conclude this appeal, nonetheless we will go on to consider other issues in the appeal in case we are wrong in this conclusion.
Turning to the concept of an `intermediary', both parties relied on the opinion of the Advocate General in the case of Arthur Andersen where he said that to be an intermediary an agent must occupy a position as a mediator between the policyholder and the insurance company, which necessarily implied the existence of relations between those parties. Both parties also referred to Volker Ludwig , where at paragraph 23 negotiation was described by the court as "… in effect a service rendered to and remunerated by a contractual party as a distinct act of mediation. In that regard the purpose of such an activity is to do all that is necessary in order for two parties to enter into a contract." Mr Cordara says this is exactly what InsuranceWide does. Mr Key submits that InsuranceWide has no involvement at all in what is the critical timeframe, namely the moment when the insurer starts dealing with the potential insured. In effect we are being asked to decide whether, to be acting as an intermediary it is necessary for an insurance agent to be involved in some way in the settling of the specific terms of the contract made between the two parties or is it sufficient, as Mr Cordara submits, for it to have introduced the parties, to have detailed relations with the insurance companies, to be paid on commission only when a successful contract is signed, and to be the recipient of confidential information from the insurer? In effect the Commissioners rely on the European legislation and Mr Cordara relies on the VATA, although it is his case that InsuranceWide complies with both.
In the pre-Wizard phase all the interaction which occurred such as taking telephone calls, dealing with correspondence etc. took place between Cox and the persons seeking insurance, InsuranceWide had no part in it. InsuranceWide did not have legal relations with the persons seeking insurance and in the early stages specifically disclaimed any role as an intermediary in its Terms and Conditions. Its role was not that of a mediator between the parties, as was said by the Advocate General in Arthur Andersen to be necessary to qualify as an intermediary. During the pre-Wizard phase InsuranceWide was in our judgment nothing more than an introducer and its role at that time cannot be properly distinguished from that of an advertiser in that via its website it had no interaction with either party beyond making the one aware of the other and providing a means of the one contacting the other. Its activities during that period did not come within either the requirements of the Directive or the VATA, but came within those described in Note 7(a) to Group 2 of Schedule 9 of the VATA as a supply of 'advertising…or similar services' and as such are excluded from the exemption.
In respect of the periods after the introduction of the Wizard, Mr. Key submitted that InsuranceWide was still not an intermediary as it had only a passive role, it was not dealing with queries and was not acting on behalf of either party 'in the course of' the arranging of the insurance contract. It did not provide a definitive quote that was capable of acceptance and when live quotes were given to InsuranceWide they were not passed on to the person seeking insurance. However, the VATA does not require that to be an intermediary an agent has to be so involved. Note (1) only requires that he satisfy one of the sub-paragraphs (a) – (e). After the introduction of the Wizard InsuranceWide's activities went beyond that of being a mere promoter of, and introducer to, the insurance companies, which no longer all belonged to the Cox group. It conducted regular negotiations with a range of insurance companies about the nature and price of their products, and, by use of its software, it was able to save the insurers time in that it excluded inappropriate or unsuitable applications. It also saved the would-be insured time by referring him only to appropriate insurers. This was more particularly the case after the introduction of the InsuranceWidePlus and the InsuranceWideConnect phases when there was no longer a need for the person to fill in more than one form as the form completed on InsuranceWide's website could be put through directly to the relevant insurer. The fact that the quotes were given to InsuranceWide but not shown to the seeker of insurance of itself shows that InsuranceWide was doing far more than would a mere advertiser. It had to make a positive decision to select from the quotes shown to it those most suitable for the person's needs and only once it had done this did it pass the person on to the relevant insurance companies. We find that by reason of the above, from after the introduction of the Wizard, InsuranceWide was acting within the compass of the exemption provided by the VATA. We find that, despite its disclaimer in its terms and conditions, that it was as a matter of law acting as an insurance intermediary, that its services were related to an insurance transaction in the course of its acting in an intermediary capacity, that it was bringing together the relevant parties with a view to insurance within Note (1)(a) and (b) and also that it was carrying out work preparatory to the conclusion of contracts of insurance within Note (1)(c).
Whilst in the circumstances it is not necessary to decide whether or not InsuranceWide also comes within the European concept of an intermediary given that we have found that InsuranceWide does come within the provisions of the VATA, nonetheless in the event that this matter goes further we consider it appropriate to do so. In our judgment InsuranceWide, from after the introduction of the Wizard, on the basis of the activities set out in the preceding paragraph, does sufficient to bring it within the provisions of Article 13B(a) to the extent only that it provides services related to insurance and reinsurance transactions. We have of course already determined that it at no time is an insurance agent. We must also consider Mr. Cordara's submission that in effect there is no difference between the concept of an agent and an intermediary, for which he relies in particular on Public Notice 701/36/02. We accept that the Public Notice itself does equate the two concepts, however the VATA clearly distinguishes them and we must be guided by the legislation. A further submission made by Mr Cordara was that if InsuranceWide did not come within the exemption it would be at a competitive disadvantage vis-à-vis off-line insurance agents and brokers. Given our finding that it is not an agent, we do not consider that this is a relevant consideration.
With regard to the misdeclaration penalty, we informed Mr Cordara that it was not necessary to address us on that issue. The matters in issue are very technical, and the fact that the Commissioners felt it necessary to re-amend the Statement of Case at a late stage in the proceedings shows that it was not a straightforward case, as does the plethora of authorities to which we referred. We therefore announced our decision to allow the appeal on that matter only in the course of the hearing.
This appeal is dismissed. Liberty to apply with regard to the issue of costs.