HMRC has published Revenue & Customs Brief 6 (2025) following the recent First-tier Tribunal decision in Hastings Insurance Services Ltd v HMRC [2025] UKFTT 275 (TC).
This ruling provides important clarity on the ability to recover input VAT on insurance intermediary services supplied outside the UK before 31 December 2023.
What’s Changed?
The First-tier Tribunal confirmed that HMRC’s previous approach was too restrictive and not compatible with EU VAT Directives retained in UK law post-Brexit. It ruled that the true “customer” for VAT purposes is the offshore insurer receiving the intermediary services, not the UK policyholder. As a result, insurance intermediaries that supplied services outside the UK could rely on the direct effect of EU law to recover relevant input VAT incurred prior to 1 January 2024.
From 1 January 2024, these rules changed significantly, meaning businesses can no longer rely on EU law to override UK VAT law. UK law now takes precedence, so any rights that previously came from EU directives no longer apply. While VAT rules will generally be interpreted as before, the ability to use EU law as precedence over UK law has ended.
Why It Matters
Businesses that provided insurance intermediary services to offshore insurers before the end of 2023 should revisit their historic VAT positions. There may be opportunities to make retrospective claims for input VAT, but these are subject to statutory time limits, for input VAT this must be made within 4 years. HMRC’s updated guidance now aligns with the recent tribunal decision, giving greater certainty for cross-border insurance arrangements.
Next Steps
Businesses operating in the insurance sector should:
- Check if they supplied intermediary services to non-UK insurers before 31 December 2023
- Review past input VAT recovery and consider whether any additional input VAT recovery is eligible through a HMRC disclosure
- Monitor HMRC updates for any further clarifications
Our VAT Advisory team is here if you’d like to discuss the potential impact or opportunities of this HMRC Brief. We can support businesses in this sector who are seeking to review their input VAT recovery position on intermediary supplies made to non-UK insurers before 31 December 2023 and liaise with HMRC where any input VAT claims are submitted.
Your Xeinadin client manager can refer you to our specialist VAT Advisory team for support or you can email us on [email protected] to discuss this further.
Being proactive now can ensure you do not miss out on VAT recovery opportunities.
