Landmark Tribunal VAT Win for Insurance Intermediaries: Hastings v HMRC

The First-tier Tax Tribunal’s decision in Hastings Insurance Services Ltd v HMRC [2025] UKFTT 275 (TC) marks a turning point for VAT recovery rights in the UK insurance intermediary sector. The Tribunal found in favour of Hastings, holding that input VAT was recoverable on services supplied to a Gibraltar-based insurer, even where the insured policyholders resided in the UK. The case scrutinised HMRC’s restrictive interpretation of the Specified Supplies Order as amended in 2019 and challenged the domestic application of the so-called “Offshore Looping Regulations” under the retained EU VAT regime.

Dispute Between Hastings Insurance and HMRC

Hastings Insurance Services Ltd is a UK-based intermediary acting on behalf of Advantage Insurance Company Limited, an insurer incorporated in Gibraltar. Hastings provided underwriting and broking services to Advantage, which ultimately issued insurance policies to UK customers. The dispute arose when HMRC refused to allow Hastings to recover input VAT for the period 1 January 2019 to 31 December 2022, relying on the 2019 amendments to the Value Added Tax (Input Tax) (Specified Supplies) Order 1999 (SI 1999/3121), as amended by SI 2018/1328. HMRC argued that since the underlying insurance was consumed by UK customers, the intermediary could not reclaim VAT under the exemption for services supplied to non-UK entities.

Download the Hastings Judgment

The Tribunal’s Examination of VAT Recovery Under Article 169(c)

At the heart of Hastings’ argument was Article 169(c) of the Principal VAT Directive (2006/112/EC), which allows a taxable person to deduct VAT incurred on services supplied to customers established outside the European Union. Hastings maintained that Advantage Insurance was the direct recipient of its services and was established outside the UK and EU, entitling it to full VAT recovery. The Tribunal agreed, reaffirming that Article 169(c) has direct effect and is sufficiently clear and precise to confer rights enforceable in UK law even post-Brexit, by virtue of section 4 of the European Union (Withdrawal) Act 2018.

Determining the “Customer” in Cross-Border Insurance Transactions

The Tribunal placed particular emphasis on identifying the true recipient of the intermediary services for VAT purposes. It rejected HMRC’s argument that the UK policyholders were the ultimate customers, finding instead that Advantage Insurance—the Gibraltar-based entity—was the contracting party and recipient of the taxable supply.

Post-Brexit Legal Effect of EU VAT Provisions in the UK

The Tribunal reinforced that, under section 4 of the EU (Withdrawal) Act 2018, rights previously recognized under EU law, including those derived from the Principal VAT Directive, continue to have effect in the UK legal framework post-Brexit, so long as they were directly effective before the end of the transition period. The judgment emphasized that domestic legislation cannot be interpreted in a vacuum and must be aligned with higher-order retained rights.

Impact of the Tribunal’s Ruling on the Insurance Sector

The Hastings ruling could have wide-ranging implications for other intermediaries supplying services to non-UK insurers. Many firms previously blocked from reclaiming VAT under the amended Specified Supplies Order may now be able to pursue historical claims. Tax and legal practitioners should carefully evaluate past VAT treatment where intermediary services were provided cross-border. The Tribunal’s judgment is particularly relevant for periods up to 31 December 2023, given that further amendments have since taken effect under the Finance Act 2023. Although HMRC is expected to appeal, the decision currently stands as a persuasive precedent for intermediaries operating in international markets.

Legal Strategy for Insurance Intermediaries Post-Hastings Ruling

Insurance firms and intermediaries should immediately assess their entitlement to reclaim VAT on historic supplies made to overseas insurers. Submitting protective claims with appropriate supporting documentation may be essential to preserve rights before limitation periods expire.

Moreover, businesses should review contractual structures to clarify who is considered the service recipient for VAT purposes, drawing on the legal reasoning in this case. Continuous monitoring of HMRC’s response, and any further litigation or legislative revisions, is advised to maintain compliance and capitalize on potential tax efficiencies.

A Precedent in Favour of Cross-Border VAT Recovery

The decision in Hastings Insurance Services Ltd v HMRC underscores the continuing relevance of EU VAT principles in UK domestic law and reaffirms the rights of intermediaries to recover VAT in cross-border transactions. The Tribunal’s robust interpretation of Article 169(c) and rejection of HMRC’s narrow view of the “customer” provides a clear legal framework for VAT recovery where services are supplied to non-UK insurers. This case serves as a valuable precedent for both advisors and businesses, emphasizing the importance of correctly identifying the legal recipient of services and reinforcing the legal protections afforded under retained EU law.

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Contact our experienced tax dispute resolution team today for a confidential discussion and expert legal guidance on 02071830529 or email us at [email protected]. We are here to help you understand your obligations, navigate HMRC scrutiny, and protect your interests in all tax-related litigation matters.

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