IPT – supplies liable to the higher rate

By Tolley

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

  • IPT – supplies liable to the higher rate
  • Motor vehicles
  • Domestic appliances
  • Travel insurance

This guidance note provides an overview of the types of supplies that are liable to the higher rate of IPT. This note should be read in conjunction with the following guidance notes:

FA 1994, ss 48 – 74, Sch 6A, Sch 7 and Sch 7A; Insurance Premium Tax Regulations 1994, SI 1994/1774 (subscription sensitive);HMRC Notice IPT1 ; IPT04900; 2006/112/EC , Article 401; De Voil Indirect Tax Service V18.112 (subscription sensitive)
  • Insurance Premium Tax (IPT) – introduction
  • IPT – exemptions and risk management
  • IPT – apportioning premiums and the de minimis
  • IPT – Registration requirements
  • IPT – accounting requirements
  • IPT – returns, payments and penalties
Motor vehicles

The higher rate of IPT will only be applicable to insurance premiums related to a motor car / motor cycle where the contract of insurance is arranged through or supplied by:

  • a party who has supplied the of motor car or motor cycle (eg any business who has supplied the motor car / cycle to its customer, not just manufacturers and dealers and car hire companies)
  • a business that is connected to a supplier of the motor car or motor cycle, where the insurance relatesto a motor vehicle provided by the connected supplier (see below for a definition of ‘connected’)
  • a party who pays the business described in the first two bullet points above, a fee relating to an insurance contract covering the motor vehicle

The higher rate will apply to insurance sold by the above parties regardless of whether any goods or services are actually purchased unless the business has supplied ordinary motor insurance (see below).

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