The UK tax authorities have announced that, following its loss on Appeal of the InsuranceWide and Trader Media VAT cases, it will not be appealing.

This decision means that insurance introductory and comparison websites will continue to be exempt from VAT, which will have the knock-on effect of perhaps leaving insurers with unexpected VAT bills (should they have service agreements with such websites).

VAT rules in the UK are dictated by Directives from the EU Commission in Brussels, with those exempt from VAT unable to recover it on their own costs.

Insurance comparison websites were seen by UK tax authorities as advertising, and thus not VAT exempt, but the courts disagreed.

HMRC has confirmed it will not seek to take the case any further, and issued new guidance about the rules it will apply in the future regarding VAT liability or lack thereof.