HM Revenue and Customs Brief 15/16 - VAT - Insurance
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Published 28 September 2016
VAT - use and enjoyment of
insurance repair services
Purpose of this brief
To alert those affected by a change to the place of supply of
insurance repair services which is being introduced on 1 October 2016.
2. Who needs to read
You should read this if you provide repair services to an
insurer (or their agent) or an insurer (or agent) that is obliged to
repair goods belonging to the insured party.
When an insurance claim is made for damage to the insuredís
goods, the insured will normally be the recipient of the services
provided, as the insurance will usually provide for a cash indemnity to
cover the insured loss or to replace the goods damaged.
However, some contracts specify that the goods will be
repaired by the provider of the insurance. In these cases the supply of
the repair service will be to the insurance provider. Currently where
one of the parties is located outside the EU, where VAT is due will depend
upon where the recipient of the service is located.
Some insurance firms have used this to their advantage and set
up offshore entities to receive repair services free of VAT. This gave them a
competitive advantage over UK
To level the playing field, with effect from 1 October 2016,
the supply of repair services carried out as the result of an insurance
claim made to an insurer, or their agent, located outside the EU will be covered by a
new use and enjoyment provision. This means VAT is due where the
service is consumed and VAT
will be due on goods repaired for people living in the UK. UK repairers will
therefore have to charge VAT
to insurers or their agents that are based outside the EU.
4. Where to go for more
Guidance has been published in the VAT place of supply of
services manual VATPOSS15000.
The VAT Notice 741A
has been amended to include the new measure.
About the Author
© Crown Copyright 2016.
A licence is needed to reproduce this article and has been republished
for educational / informational purposes only. Article reproduced by
permission of HM Revenue & Customs.
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Article Published/Sorted/Amended on Scopulus 2016-09-28 00:00:00 in Tax Articles