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Output VAT on insurance claim??

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I have a client whose shop flooded and they have received compensation for loss of income from insurance company of £25k - my question is do I account for output VAT on this amount or is it expemt from VAT?

I know when an insurance company pays for loss of property they pay excluding VAT but cannot find any documentation on income from loss of trade?


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By lionofludesch
15th Oct 2019 15:14

It's not even exempt.

It's outside the scope of VAT. No supply has been made to the insurance company.

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By stepurhan
15th Oct 2019 15:29

To clarify on your second point, the reason why insurance companies pay for things like repairs net of VAT is because the VAT-registered business can reclaim the input VAT. The insurance company is only covering the amount of loss the business has suffered (the net cost of the repairs).

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