The European Court has issued its Decision in the case of Aspiro SA, saying that claims handling should be subject to VAT.  Many EU States already apply VAT if the claims handler is not also the introducing broker or agent, and it appears this is correct in EU law.

The UK and several other EU States did not apply VAT to claims handling and policy administration following the 2005 Andersen case, but it now seems inevitable unless EU law can be changed.

It is likely that HMRC will consult on timing and scope, but insurers should begin to consider other options immediately. Bringing more claims handling in-house, making the broker responsible also for handling claims, or setting up a cost sharing group are some options.  VAT on policy administration should also be considered likely.