Partial VAT exemption guidance for insurance industry |
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27 April 2011 The UK's tax authority, HMRC, and the Association of British Insurers have issued joint guidance on the rules for the application of partial VAT exemption for insurers and brokers. Tom Hilverkus from the TMF Group provides an overview of the new briefing. Financial services, which includes insurance, is generally exempt from VAT - meaning VAT is not charged on the service. However, VAT incurred in the provision of the service ('input VAT') is suffered as a cost to the provider and cannot be claimed back. However, since many insurance industry participants also provide taxable supplies, which do incur VAT, there is special provision for the allocation and recovery of the input VAT. The briefing provides an outline of the rules for applying for partial VAT exemption. It covers the following issues:
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