Insurance Companies and VAT

[europeanprinter]

Hello

I am a Spain based print broker. We have relationships with printers around Europe (as our name hopefully suggests) and the UK has been a good market for us in the past.

Recently a friend told me that UK based insurance companies cannot claim back the VAT they pay for goods and services. I'm not sure why they have been singled out in this way - but I imagine that there is a reason...

Thus, I imagine, when a UK insurance company has their printing done, if they do so in the UK, they pay the VAT on top and simply have to carry the charge.

When we invoice UK companies we do not have to levy the Spanish VAT.

It would make sense to me that UK insurance companies should investigate this.

Can anyone confirm or clarify the situation with VAT for this sector? I will initiate a marketing campaign to this sector if I can establish the reality of the situation.

Many thanks in advance for any advice.

Steve Cameron

[Williams lester]

Insurance services are exempt from VAT and for any business providing solely these services there is no taxable supply. Where there is no taxable supply there can be no reclaim of any VAT on costs incurred.

[elainec100@cheapaccounting]

why not read the HMRC guidance on it - great place to start to research the area

http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageLibrary_PublicNoticesAndInfoSheets&propertyType=document&columns=1&id=HMCE_CL_000129

[David Richards]

Recently a friend told me that UK based insurance companies cannot claim back the VAT they pay for goods and services. I'm not sure why they have been singled out in this way - but I imagine that there is a reason...Insurance is exempt from VAT in the UK (an "exempt supply"). Which means no VAT is charged on insurance, but also that insurance firms cannot reclaim VAT on the things they buy which relate to an "exempt supply".

Thus, I imagine, when a UK insurance company has their printing done, if they do so in the UK, they pay the VAT on top and simply have to carry the charge.That's correct.

When we invoice UK companies we do not have to levy the Spanish VAT.Presumably they have supplied you with a UK VAT number. (If they don't, you probably should be charging Spanish VAT.)

If they have a VAT number, it suggests they are "partially exempt". Which means that they can claim VAT on some things, but they can't reclaim VAT on the things they buy which relate to "exempt supplies". So even though you don't charge them any VAT, they will have to pay UK VAT on what they buy from you.

EC VAT generally works like this. When you (a Spanish company) sell to VAT-registered business in another EC country, you don't charge them VAT. So let's say you sold something to a British company - a company which wasn't involved in insurance. When your customer gets the invoice, they will pay UK VAT on what they bought from and they get to claim it back - all at the same time. It's 'notional' VAT that they just report on their VAT return.

In this case, your customer is VAT registered - so you don't charge Spanish VAT. But on their next VAT return they will pay UK on what they bought from you - but as it relates to an "exempt supply", they won't be able to claim it back.

In simple terms, it means that it doesn't really matter where they buy the goods from - they'll still pay UK VAT and they won't be able to claim it back.

(This is a bit simplified and all from memory - so apologies if I have got anything wrong.)

[David Griffiths]

Can anyone confirm or clarify the situation with VAT for this sector? I will initiate a marketing campaign to this sector if I can establish the reality of the situation.

Many thanks in advance for any advice.

Steve Cameron

It won't work.

The insurance company has to implement the reverse charge on the value of imports. In other words charge itself output tax on the supply, and being partially exempt it won't be able to deduct it in full.

It doesn't even work if the insurance company prints the stationery itself - there are rules to impose the equivalent of a reverse charge (http://www.hmrc.gov.uk/manuals/bimmanual/bim31565.htm) in such circumstances

[europeanprinter]

thanks for all the replies.... this seems to be a great forum and a great resource.

[lockyer]

Insurance brokers get hit from this too......its my personal bug bear. feel free to quote me!

[David Griffiths]

Insurance brokers get hit from this too......its my personal bug bear. feel free to quote me!

So you are happy not to pay VAT on your commissions


but

Don't like paying VAT on stationery?