Add IPT/VAT for Admin Fees
We have received new tax advise regarding our Admin Fees charged. This has stated that the Fees should incur IPT (some may incur VAT depending on the circumstances) Therefore an option to add a tax rate for the fee would assist in accounting to insurers and would need to be included in any IPT declaration to the insured on the schedule.*
* Taxation is a complex issue and so we would advise other users to seek their own advice on whether IPT is applicable to these fees.
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Yes this is a highly complex area. It is dependent upon the client type and the type of insurance. HMRC give full guidance on this on their website.
We treat this as follows, maybe it will help other Schemeserve users:
We collect a Policy Fee after the Premium and IPT on the premium has been calculated in the matrix page. The Policy Fee we always detail in the documents as being inclusive of IPT.
Outside of schemeserve we calculate the amount of IPT that has been collected within the Policy Fee and remit this ourselves as the Broker to HMRC. We do not send the IPT on the Policy Fee with the Insurer Premium to the insurer as we do with the IPT on the Premium.
There is a further issue, which Schemeserve does not address at all with regard to IPT. This is on discounted Policies - if a Policy is discounted using a tactical discount field on the Matrix Page then the IPT is supposed to be calculated based on the premium before a discount has been applied. This has to be manually adjusted in order to be correct.
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As far as I am aware the legislation only applies in certain circumstances which will not affect us. It is being introduced to stop aggregation sites selling policies at cost and grossing up with a fee. This was deemed to be a way to avoid IPT.
If any changes are made to schemeserve they will need to be optional i.e. a tickbox to indicate whether IPT should be charged on fees.
I would stress that this is my understanding and would welcome correction if I have the wrong end of the stick.
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Maybe it is the programmer in me speaking here, but we have recently had to generate variable handling of fees, IPT and other "costs" as part of our Taxi scheme. This was done with the help of the guys here, and we were able to control these things within the matrix. While this may end up with static data within the matrix it does make it controllable from our point of view, and far more flexible if the rules are different for New Biz, Renewals MTA etc, and also allows variable handling within each different scheme.
I maybe over complicating things... but Colin asked for input.
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