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IPT claimed as vat

Client is claiming IPT at 17.5% as input VAT. They say Customs said because it was 17.5% that it was ok!?
Is this correct?
Surely it is not VAT!
They want me to find somewhere where it says you cant claim it.


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By Anonymous
15th May 2006 11:55

The client wants to carry on claiming it because they were told it was ok.
Surely customs, when they find it, wont just roll over and say 'ok - our mistake'.

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15th May 2006 11:47

Cannot be reclaimed
As far as I know, IPT is not VAT, and cannot be reclaimed as such.

It is very hard to find evidence of the absence of something. If you asked me to find something that says "income tax is not charged at 999.74365736%", I would find it impossible.

Can you ask the client to ask HMRC (whoever told them it can be claimed) for the reference suporting their claim?

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16th May 2006 20:54

Long List..... what you would end up with if the legislation stated what payments or charges were not VAT and therefore not deductible.

The VAT Act spells out what VAT is and in another section spells out that it may be claimed as input VAT providing it meets a number of conditions. There is a short list of items where VAT may not be claimed. IPT is chargeable under entirely different legislation and therefore, not being VAT, is not recoverable as VAT.

The claiming of VAT is a right; it is something you are allowed to do if you and the VAT incurred are able to jump through certain hoops. The fact that the IPT is 17.5% is not a relevant hoop at all...therefore, the hoop jumping course is not completed.

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18th May 2006 10:15

I agree partly...
...but there is a 17.5% IPT rate introduced as an anti-avoidance measure to prevent value shifting on goods and travel insurance.


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By Anonymous
17th May 2006 18:16

Not IPT?
Ryan is correct - some insurance is chargeable to VAT at the standard rate. Basically this is where the insurance is recharged to and end user at anything other than the exact costs to the middleman.

It's possible with fee protection insurance, and also with insurance charged by removal firms. They frequently have a block policy and charge customers varying amounts.

So if it IS at 17.5% then it's likely to be VAT, which is recoverable, subject to the normal caveats. As far as I am aware IPT is chargeable at a lower rate and not being VAT is not recoverable.

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16th May 2006 11:52

Definitely IPT?
Was the charge for VAT and perhaps NOT IPT?
For instance, a firm of accountants offering an insurance type service which is regulated by a third party would not charge Insurance Premium Tax (as they are not FSA regulated) but VAT on this as a service offered. The third party would charge IPT to the accountant.

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18th May 2006 12:10

Surely if it says VAT on the invoice they can claim it, and if it says IPT they cannot.

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