I might be being dense...life insurance payout income...VATable income?

Having a wobble, please help!

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We are a financial services firm and most of our services are VAT exempt. We track it carefully to ensure our vatable supplies don't go over the registration threshold.

We are about to receive a life insurance payout in respect of one of our advisers (who sadly passed away recently). The treatment of the payout and the set up of the scheme is a long and boring story (see my previous post), but I have established that the company will have to be taxed on the income.

But, will we have to include it in our vatable income? It will take us way over the registration threshold. I suspect I might be being thick, I just had one of those stomach-churning-I've forgotten something really important moments (on the loo no-less) and  would be grateful for any advice as my panic striken brain is to pathetic to process this on a Monday morning.

Thanks in advance!

Replies (4)

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By exceljockey
10th Oct 2016 11:51

My first response would be that the payout income would be VAT exempt as the premiums paid for the policy were VAT exempt.

Therefore it is not a VATable supply and shouldn't be included in the turnover for VAT purposes.

However I am open to correction if this is not the case.

Thanks (2)
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By exceljockey
10th Oct 2016 11:51

My first response would be that the payout income would be VAT exempt as the premiums paid for the policy were VAT exempt.

Therefore it is not a VATable supply and shouldn't be included in the turnover for VAT purposes.

However I am open to correction if this is not the case.

Thanks (2)
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By spidersong
10th Oct 2016 12:02

To be VATable there needs to be a supply made and consideration received in the course of business.

I'd assume the only people who receive business consideration for a supply made in direct connection with a persons death are assassins, so I'd think it unlikely you'll find yourself with taxable turnover for VAT purposes.

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By Accountant A
10th Oct 2016 17:07

Is this the arrangement you described in a question last month where the "fee-earner pays the monthly premiums themselves, not the company."?

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