VATVAL12240 - Specific applications: motor dealers and manufacturers: agency and 鈥渕aking arrangements for a supply of insurance鈥�
The concept of a taxable intermediary was introduced with the introduction of higher rate IPT. This obviates the problem of dealers charging a separate 鈥渁rrangement鈥� fee in respect of the sale of MBI and warranties. Without the higher rate provisions any such fees would be exempt from VAT and would not be liable to IPT as the arrangement contract was separate to the contract of insurance.