IPT – accounting requirements

By Tolley

The following Value Added Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • IPT – accounting requirements
  • Accounting for IPT
  • Calculating the tax due
  • Apportioning the premium
  • Changes in the rate of IPT
  • Bad debts
  • Anti-forestalling provisions
  • Record keeping requirements

This guidance note provides an overview the IPT accounting requirements.

FA 1994, ss 48 – 74, Sch 6A, Sch 7 and Sch 7A; Insurance Premium Tax Regulations 1994, (SI 1994/1774); HMRC Notice IPT1 ; IPT07000; 2006/112/EC , Article 401
Accounting for IPT

Once the business is registered for IPT it will need to account for IPT on all taxable insurance contracts at the appropriate rate from its effective date of registration. The date of registration will be shown on the Certificate of Registration issued by HMRC. Please see the IPT – Registration requirements guidance note for more information on registering.

IPT must be accounted for on the return that covers the period in which the tax point occurred.

Tax points

The creation of a tax point triggers the requirement to account for IPT on taxable insurance contracts. IPT will be due 1 month after the end of the accounting period in which the tax point has been created. The date the tax point is created will depend upon which accounting method used by the business:

Cash receipt methodThe tax point is the date the business either receives taxable premium payments or an agent / intermediary receives it on behalf of the insurer. Any premium received under a contract of insurance by any person on behalf of the insurer is treated as being received by the insurer. The subsequent transfer of a payment relating to the premium or part of a premium to the insurer by that person will then be disregarded for the purposes

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