Insurance

The biggest VAT issue in the insurance sector is the fact that VAT cannot be reclaimed on costs that relate to exempt sales. VAT costs may be kept to a minimum by:

• ensuring that VAT is not charged by suppliers who do not need to add VAT to their bills;
• attributing VAT on costs to transactions that give the right to reclaim VAT;
• ensuring that all transactions that give VAT recovery rights are identified and properly valued;
• using a VAT recovery method that is appropriate for the business;
• applying VAT self-assessment rules correctly, for example on imported services; and
• structuring and processing insurance claim related costs to allow recoveries by the insured.

There were a number of changes to VAT accounting rules on 1 January 2010 that will need to be properly considered to ensure the best outcome is being achieved.

In our experience, ensuring proper compliance and maintaining professional relationships based on trust are the main aims of our clients and HMRC. We have delivered large VAT savings to clients in this sector but all have been agreed with HMRC without conflict.