Commentary

V4.124 Exemption—insurance-related issues

Part V4 Exemption, zero-rating and reduced rates

V4.124 Exemption—insurance-related issues

V4.124 Exemption—insurance-related issues

Broker managed funds

A broker may, in addition to arranging a life assurance policy between an insurer and the insured party, also provide investment advice to the insurer. The fee for arranging the policy is exempt under VATA 1994, Sch 9, Group 2, item 4, but the charge for investment services, including 'performance fees' is standard-rated1.

'Run-off' services

Where an insurer ceases to underwrite insurance, or a particular class of insurance, any additional premiums he receives during the 'run-off' period follow the liability of the original supply. Where the insurer uses an outputs-based partial exemption method, return premiums, ie receipts/payments which relate to adjustments of premiums paid in earlier years, should be disregarded for partial exemption purposes. The insurer may apply for a flat rate of input tax recovery based on the premium income for the last three years of active underwriting.

Third parties who administer the run-off of contracts, ie who provide services of accounting and legal work, the handling and settling of claims and the dealing with premium adjustments, are regarded as provided a composite supply of insurance-related services (exempt). However separate supplies of admin. Such services therefore follow the normal rules in relation to the provision of services by intermediaries2.

Lloyd's syndicates/managing agents

Until 1 January 2000, Lloyd's syndicates who were required to register for VAT, or who wished to register voluntarily, were able to conduct their VAT affairs via the VAT registration of their managing agents. From that date, syndicates have been required to register in

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