VAT on reimbursement of insurance
I have a small client who has a small car selling business. He is VAT registered. As a way to generate some revenue, he has started hiring out some his cars to people who have had their cars written off in car accidents.
As part of the service, he arranges with their insurers to transfer the insurance from their car to the hire car. Often, there is an additional premium to pay to the insurer on this (say £50). He pays this on behalf of the customer. He does this to ease the process and to speed things up.
He then hires the car out.
At the end of the hire period, the customer returns the car and is charged for the hire (whatever it may be, plus VAT). They are also charged for the additional premium which he as paid on their behalf.
My question is, is this premium subject to VAT. Paragraph 4 of HMRC:Notice 701/36 (October 2011) suggests so. BUT, my client doesn't actually sell the insurance preimum, all he does is pay it on their behalf and is reimbursed. I should note that there is no profit element and it is simply an at cost reimbursement.
Thanks in advance and I hope somebody can help me!
- Client information from previous accountant 148 3
- Closing down - who should buy whom? 155 4
- Tasbook email configuration 206 3
- Unpaid Fee's 387 7
- PAYE NI 155 3
- VAT flat rate scheme 200 3
- Tax relief for backdated pension contributions 281 8
- Client cash balances, on or off-balance sheet for full service brokerage firm 242 4
- How long do legal aid take to pay? 107 1
- Two questions re client meetings and TR Fees 387 5
- Personal Pension Withdrawal 228 2
- Liability account to deal with loans from owner 158 5
- Failure to operate PAYE 1,675 31
- quote for winding down two companies and file accounts 143 1
- SA302s - Lenders to accept non hmrc copies 836 14
- How much to charge? 710 10
- break even point 1,012 30
- Trustee in Bankruptcy 192 5
- Accomodation and travel 212 1
- Issue with a software supplier 261 4
- Possible Partnership? 516
- Lunatics in charge of the asylum - Bluestone 498
- Tax and accounting treatment on long lease granted from freehold 470
- New Fangled Penalties 312
- Clubs and Taxable Income 262
- Purchase of property freehold - capitalisation of costs 260
- Deferring taxable income until after 5 April 254
- Loans to other companies 197
- Closed PAYE schemes and auto enrolment 171
- English Company Owning Property in Scotland 160