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[2004] STC 961

Value added tax - European Communities - classification of turnover tax - levy imposed on insurance premiums - whether levy could be regarded as a tax on turnover - whether levy precluded by Community law - Directive 77/388/EEC, arts 27, 33(1).

European Communities - competition - insurance premium tax - higher rate imposed on insurance sold in connection with the sale or rental of domestic appliances - whether differential rates contravening provisions of EC Treaty dealing with state aid - EC Treaty, art 87 EC.

Finance Act 1994 ss 48-74 introduced an insurance premium tax (IPT), at the rate of 2.5 per cent, on the receipt of insurance by insurers and insurance agents, whose aim was to check a trend whereby suppliers in particular of domestic appliances were replacing after-sales service contracts, which were subject to value added tax (VAT) at the standard rate of 17.5 per cent, by ancillary insurance contracts (arranged, in the great majority of domestic appliance cases, through the