vat on insurance premium

vat on insurance premium

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Client who is vat registered rents out 3 propeties.He arranges the insurance on these properties and charges 20%vat on the total premium (which includes his 10% handling charge).Two of the tenants have objected to this stating that"insurance exempt from vat".I maintain that he is correct because he is providing a service in arranging the insurance (as evidenced by 10% charge).Am i missing anything?

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By Democratus
10th May 2011 16:17

Service Charge

I believe that if the Insurance is a recharge via a service charge then it's not in fact Insurance Premiums and therefore subject to Std Rate VAT

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By neileg
11th May 2011 11:23

Couple of points

The tenants are not the insured party, the landlord is. The payments by the tenants are not therefore insurance premiums, they are reimbursement of landlords costs.

The VAT status of this charge should follow the treatment of the rents. If there is a valid option to tax and thus the rents are subject to VAT then so is the insurance charge. If there is no option to tax, then the insurance charge is not subject to VAT.

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