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VAT on insurance claim

Insurance company has paid us directly instead of paying the repairer - including VAT

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One of our company vehicles was involved in an accident. The other party accepted liability and our vehicle was repaired. The repairer wouldn't invoice the insurance company direct, so we had to pay the bill. The insurance company then paid us, including the VAT. I will declare the VAT on my next return and pass it on to the HMRC (we reclaimed it on the original invoice from the repairer). Should I also raise a VAT invoice to the insurer to keep the record straight?

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18th Mar 2019 17:05

Did the insurance company ask if you were able to recover the VAT? They usually ask me...

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to WhichTyler
18th Mar 2019 17:35

... me too.

@OP - last thing I’d do is highlight the fact to the insurance company - they might ask for it back (I know it’s just the vat element, but why create admin for yourself?)

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to atleastisoundknowledgable...
19th Mar 2019 09:33

atleastisoundknowledgable... wrote:

@OP - last thing I’d do is highlight the fact to the insurance company - they might ask for it back (I know it’s just the vat element, but why create admin for yourself?)

Steal it, you mean ?

Frankly, I'm appalled.

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to lionofludesch
19th Mar 2019 09:44

To be fair, I read the concern as being that the insurance company might ask for it back, but with it already having been paid (in error) to HMRC. If the questioner were to pass it on to HMRC in the mistaken belief that that was the right thing to do it would be rather harsh to accuse him of theft.

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to Wilson Philips
19th Mar 2019 09:52

A thief doesn't stop being a thief just because he passes the loot on to a fence.

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19th Mar 2019 09:32

You should give the VAT back to your insurer.

You are only entitled to claim the money you lost - which is the cost of repairs excluding VAT.

Under no circumstances should you send it to HMRC. It's not their money. It won't go round in the usual circle as the insurance company cannot reclaim it.

You'll probably find that you've not told the insurance company that you're registered. Or that you've told them and they've taken no gorm.

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to lionofludesch
19th Mar 2019 09:39

I agree. HMRC have already had the output VAT, from the garage. The money belongs to the insurance company.

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19th Mar 2019 09:53

"Should I also raise a VAT invoice to the insurer to keep the record straight?"

I would guess that this will raise the alarm bells at the insurance company and highlight their error.

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to lionofludesch
19th Mar 2019 10:15

Agree with Lion - better to own up and cough up a refund direct to insurance company. Would do it soon as well, just in case their internal processes eventually pick up on this and think you have made a false claim.

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19th Mar 2019 10:24

The more they pay out in claims, the bigger your premium will be next year.

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to lionofludesch
19th Mar 2019 10:29

And not just his premium :(

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By paul.pf
20th Mar 2019 10:22

Thanks for all the responses. The insurance company didn't know we were VAT registered hence they sent the full amount. As we are VAT registered I treated it as an overpayment and refunded them the excess.

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to paul.pf
20th Mar 2019 10:40

Correct outcome.

Well done.

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