VAT ?? - Self Employed Insurance Sales Agent

VAT ?? - Self Employed Insurance Sales Agent

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A self employed insurance agent earns commission both on the policies he sells, and on the policies sold by his 'team' (also self employed in their own right).

The commission earned each year has been in the region of £40,000 to £50,000, but he now expects it to increase to approx £70,000 pa. Should he register for VAT, or is the commission outside the scope of VAT because he is 'selling' financial products ?

David

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By frauke
28th Sep 2006 19:27

You answered you question
Does not have to be VAT registered.

There is something else you may not have considered - A lot of the commission he has received may not actually have been "earn't" and therefore is not taxable income yet!

You need to check if his commission is paid on a "advanced" basis or not.

i.e. if he receives commission on a policy provided immediately provided its in force over the next 2 years - then his income also should be spread over the 2 years. This is because if for any reason the policy is cancelled the income may be clawed back by the insurance company and is not treated as income until that part cannot be clawed back.

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By StephenElms
27th Sep 2006 17:51

Selling Insurance
... is outside the scope of VAT. Hope that this helps.

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