Forum

• # 91794
• Mon 24 Jun 2013 03:18 PM

Hi,

What advice can you give on invoicing an insurance company at zero value vat and invoicing their customer VAT only?

Nicola

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• # 91804
• Mon 24 Jun 2013 08:58 PM

Hi Nicola,

Insurance is a VAT exempt activity. If your business is providing a standard rated transaction in support of an insurance recovery claim, this means that the insurer cannot recover the tax. This is why they direct you to the claimant to pay. Often, this "customer" is not registered for VAT (eg member of the general public) and he/she cannot recover it either.  

• Kind regards,
  PeteL  

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• # 91814
• Tue 25 Jun 2013 08:08 AM

Thanks Pete,
I had previously been advised that the insurer just has to take 'hit'.
Also, as it will prove to be time consuming invoicing both insurer and their customer, I was hoping that I could say that it couldn'd be done. However, I assume it is just a matter of choice?

Nicola

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• # 91819
• Tue 25 Jun 2013 10:13 AM

Hi Nicola,


Your previous advice was morally correct - the insurance company should absorb the cost. In practice they just stall the claim until the third party pays it, and justify this by saying that overall premiums will rise otherwise. It's the law of the jungle.
The only alternative you have is to determine whether VAT should have been raised in the first place.
HMRC Notice 701/36 sections 4 and 5 may be worth a read. 

http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_ShowContent&id=HMCE_CL_000129&propertyType=document#P208_31983
 

• Kind regards,
  PeteL  

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