VAT Recharge on Insurance (2024)

Table of Contents
Didn't find your answer? Industry insights Why Integrations Need to Go Beyond the ledger Clarity is needed about VAT on live screenings Why outsourcing company tax work makes sense Latest Any Answers Can You Register as a ACSP on Companies House yet? International bank charges Will a CGT event occur for all FHL in April 2025? Related resources Making Tax Digital - VAT developments How to bring bookkeeping in-house Expert guide to CIS and new reverse charge rules Replies (28) Please login or register to join the discussion. Related posts NEW 90K VAT THRESHOLD VAT registration for zero rate product Charging VAT on sales made on behalf of client

Log inSign up

Subscribe to Newsletter

Menu

Any Answers

VAT Recharge on Insurance (2)

Joanne Reynolds

Lancaster Motorcycles

21st Jul 2017

Any Answers comment Icon28

13121

Didn't find your answer?

Industry insights

Receipt Bot

Why Integrations Need to Go Beyond the ledger

iplicit

Clarity is needed about VAT on live screenings

Initor Global

Why outsourcing company tax work makes sense

View more

Latest Any Answers

  • Can You Register as a ACSP on Companies House yet?

  • International bank charges

  • Will a CGT event occur for all FHL in April 2025?

A landlord invoices monthly for rent to a compnay whichis not vatable, however yearly he invoices a charge for insurance which he addsvat on as he says he haspaid the insurance company and is simply passing the cost on, should this vatable?

Tags

  • VAT

Related resources

Guide

Sponsored

Making Tax Digital - VAT developments

Guide

Sponsored

How to bring bookkeeping in-house

Guide

Sponsored

Expert guide to CIS and new reverse charge rules

Replies (28)

Please login or register to join the discussion.

VAT Recharge on Insurance (9)

By lionofludesch

21st Jul 2017 10:21

Edit - sorry - I just picked up that the rent is exempt.

So far as I can see, the landlord is renting out an insured building. If there's no option to tax, there's no VAT.

Thanks (1)

Replying to lionofludesch:

VAT Recharge on Insurance (10)

By Joanne Reynolds

21st Jul 2017 11:55

Thank you.

This is what i thought, if he does not charge them VAT on the rent charges then he doesn't charge them VAT on the insurance

Thanks (0)

VAT Recharge on Insurance (11)

By Wanderer

21st Jul 2017 10:29

Are you sure someone's not confusing VAT with Insurance Premium Tax?

Thanks (2)

Replying to Wanderer:

VAT Recharge on Insurance (12)

By Joanne Reynolds

21st Jul 2017 11:53

They have received a bill for the building from the insurance company which included IPT. They then invoiced the tenant for the cost of the insurance plus VAT, as they do not charge VAT on the rent invoices, i did not think they should VAT on the insurance.

Thanks (1)

VAT Recharge on Insurance (13)

By tom123

21st Jul 2017 10:52

Conversely, I am landlord of a building with an option to tax.

My insurance recharges (referred to as insurance rents in the lease) have VAT applied to them.

Thanks (1)

Replying to tom123:

VAT Recharge on Insurance (14)

By Joanne Reynolds

21st Jul 2017 11:51

The rent that is charged is not vatable in this instance, so is it correct that they do not charge us VAT on the insurance contribution recharge?

Thanks (0)

Replying to Joanne Reynolds:

VAT Recharge on Insurance (15)

By lionofludesch

21st Jul 2017 12:10

Yes - the point is that it is additional rent and should be treated in the same way.

Thanks (1)

Replying to Joanne Reynolds:

VAT Recharge on Insurance (16)

By shaun king

24th Jul 2017 21:46

YES

Thanks (0)

VAT Recharge on Insurance (17)

By Arbitrary

21st Jul 2017 13:28

The simple way to describe the general situation is that the VAT treatment of the insurance follows the VAT treatment of the rent.

Thanks (0)

VAT Recharge on Insurance (18)

By thomas34

21st Jul 2017 14:06

Surely the landlord is not providing the insurance so must add VAT to the recharge. It's comparable to buying stamps as an exempt supply and charging the customer postage plus VAT. It sounds as if the landlord is treating it correctly.

Thanks (0)

Replying to thomas34:

VAT Recharge on Insurance (19)

By lionofludesch

21st Jul 2017 14:22

I disagree. It's a single supply of an insured property. The recharged insurance is actually rent.

Thanks (0)

VAT Recharge on Insurance (20)

By shaun king

21st Jul 2017 15:44

Well it can only be exempt from VAT. Either the landlord is arranging an exempt supply of rent to the tenant as an agent, in which case the supply is exempt from VAT or the insurance is part of the consideration for the letting and as the rent is exempt, then this supply is exempt.

The only way the landlord can make a taxable supply is if he exercises an OTT on the property in question.

Thanks (0)

Replying to shaun king:

VAT Recharge on Insurance (21)

By Joanne Reynolds

21st Jul 2017 16:04

That is correct the landlord is arranging exempt rent to the tenant as they have not applied for OTT.

Thanks (0)

VAT Recharge on Insurance (22)

By lionofludesch

21st Jul 2017 15:53

Who gets the money if the building burns down ? Landlord.

Therefore the tenant cannot be being supplied with insurance. He has no insurable interest. It has to be extra rent.

*I'm assuming it's insurance for the property and not contents here.

Thanks (0)

Replying to lionofludesch:

VAT Recharge on Insurance (23)

By Joanne Reynolds

21st Jul 2017 16:10

Yes the insurance is to cover the building only.
Part of the lease says that the tenant is to pay a % of the insurance bill to the landlord to cover his insurance costs relative to the the % of the building that the tenant occupies.
As the landlord has not applied for OTT on the property, the monthly rent charge is invoiced without VAT, so therefore I agree the insurance contribution should also be non taxable. The tenant will not benefit from any claim, they have their own insurance for contents (stock, fixture and fittings.....

Thanks (0)

Replying to Joanne Reynolds:

VAT Recharge on Insurance (24)

By lionofludesch

21st Jul 2017 16:27

Well, there you are then.

Analyse it logically and it becomes obvious.

Thanks (1)

Replying to fawltybasil2575:

VAT Recharge on Insurance (25)

By Joanne Reynolds

22nd Jul 2017 12:44

Basil
You are correct I am the 'company', to give you more information, we rent part of an industrial unit which has been divided into separate smaller units. The tenants of each unit have received and paid monthly rental invoices which are not vatable as the landlord does not have OTT. We have all just received an invoice (all currently unpaid) from the landlord for buildings insurance, relevent to the % of the whole building which we occupy. I queried this and said that insurance is not vatable, his response was that he has paid the insurance company and is now passing the relevant cost onto us and as he is vat registered he has to charge us vat also....
His accountant told him so...
Im new to all this, so any help / info provided is greatly received

Thanks (0)

Replying to Joanne Reynolds:

VAT Recharge on Insurance (26)

By Ruddles

22nd Jul 2017 13:26

Tell the landlord to hire a better accountant. It's not that insurance is not VATable - the point, made several times already in this thread, is that re-charges such as insurance and utilities (normally) follow the treatment of the rent itself.

Thanks (0)

Replying to fawltybasil2575:

VAT Recharge on Insurance (27)

By lionofludesch

22nd Jul 2017 13:59

Basil

Could I respectfully offer an alternative reasoning?

Surely, despite the value of the supply being equal to proportion of the insurance premium attributable to the OP's property, this is not a supply of insurance. Only the landlord would benefit from any claim and the tenant has no insurance in respect of the property.

Regardless of the wording, this is an additional rental charge and that is the reason that the VAT treatment follows that of the rent itself.

Thanks (0)

Replying to lionofludesch:

VAT Recharge on Insurance (28)

By Ruddles

22nd Jul 2017 14:32

It's not quite as simple as that. If the lease is a landlord repairing lease then the insurance re-charge is indeed effectively additional rent and the VAT treatment will follow that of the rent itself.

If, however, the landlord has arranged a block policy to insure tenants in respect of tenant repairing leases then this may be seen as a separate supply of insurance (exempt). In this particular case, it's a moot point, and VAT should not be charged on the insurance in any event.

Thanks (0)

Replying to Ruddles:

VAT Recharge on Insurance (29)

By Portia Nina Levin

22nd Jul 2017 14:45

Ruddles wrote:

If, however, the landlord has arranged a block policy to insure tenants in respect of tenant repairing leases then this may be seen as a separate supply of insurance (exempt). In this particular case, it's a moot point, and VAT should not be charged on the insurance in any event.

I don't agree, unless the landlord is regulated, they can't make a supply of insurance. If they do they should add IPT. In this scenario, where the leaseholders are the recipients of the insurance supply, with the landlord acting as agent, I'd suggest that this was a disbursem*nt.

Thanks (0)

Replying to Portia Nina Levin:

VAT Recharge on Insurance (30)

By Ruddles

22nd Jul 2017 15:09

I never said that the landlord would be making a supply of insurance - I said that it might be (based on guidance that is far more reliable than an internet forum) seen as such.

Following the decision in Card Protection Plan, "They [HMRC] now accept that such charges made by block policyholders can be seen as exempt insurance transactions, even though they would not be seen as insurance for regulatory purposes."

But no doubt you will argue that HMRC are incorrect in taking this view ;¬)

In any event, if it were to be treated as a disbursem*nt, the result is the same - no VAT to be charged on it.

Thanks (0)

VAT Recharge on Insurance (31)

By DMGbus

21st Jul 2017 21:00

The nature of the building might dictate that the rent is chargeable to VAT even absent of an Option To Tax. Example storage rent / warehouse rent (rules as introduced October 2012).

Thanks (0)

Replying to DMGbus:

VAT Recharge on Insurance (32)

By lionofludesch

21st Jul 2017 21:41

Ummm. It's hard to envisage a scenario where buildings insurance comes as an added extra to a storage charge.

Thanks (0)

Replying to lionofludesch:

VAT Recharge on Insurance (33)

By DMGbus

21st Jul 2017 21:55

So, what about rent charged on a storage warehouse?

Thanks (0)

Replying to DMGbus:

VAT Recharge on Insurance (34)

By shaun king

21st Jul 2017 22:35

DMGbus wrote:

So, what about rent charged on a storage warehouse?

That's just rent which could be subject to the OTT as it is additional to the rent payable.

Thanks (0)

Replying to shaun king:

VAT Recharge on Insurance (35)

By Ruddles

22nd Jul 2017 11:52

What about the changes that brought self-storage facilities into standard-rating?

"A supply of storage may occur regardless of the physical use of a facility if it is implicit in the nature of the premises or commercial documentation that the facility is intended for use as storage and is not actually being used for some other purpose. If the supply is of a facility that is clearly for storage purposes it will be covered by the changes even while it is empty."

Thanks (0)

Replying to DMGbus:

VAT Recharge on Insurance (36)

By lionofludesch

22nd Jul 2017 09:41

DMGbus wrote:

So, what about rent charged on a storage warehouse?

Not sure what your point was but I agree with Shaun.

Thanks (0)

Related posts

NEW 90K VAT THRESHOLD

45 Answers

0 likes

1004 views

Any Answers image, large quotes

VAT Recharge on Insurance (37)

Bee_Dude

VAT registration for zero rate product

31 Answers

0 likes

809 views

Any Answers image, large quotes

VAT Recharge on Insurance (38)

accountinglady

Charging VAT on sales made on behalf of client

5 Answers

0 likes

482 views

Any Answers image, large quotes
VAT Recharge on Insurance (2024)
Top Articles
Revolutionizing Finance: Exploring Fintech Technology and Development
How to Manage Your Money as an Expat - Migrating Miss
Zen Leaf Medical Dispensary in El Dorado, Arkansas [2023]
Zen Leaf Dispensary in El Dorado, AR
Templar - [2.5] 2600+ Int Whispering Ice Guardian. Wonderous Wizard of Wisdom - Forum - Path of Exile
[3.24]Whispering Ice Icestorm Trickster Build - Odealo's Crafty Guide
NASCAR TV Schedule This Weekend: April 26 – 28
NASCAR TV Schedule This Weekend: April 12 – 14
Gabriel Kuhn Case: Where is Daniel Petry Now? And All Info (Crime scene photos)
Who is Daniel Petry ? A Case of Gabriel Kuhn's Murder
Busted Newspaper Clay County Indiana
Jangliuxinh
Latest Posts
What to Do With Your Hobby Farm at Tax Time
95Ct Stunning Red Ethiopian Welo Rough Specimen Rough Opal
Article information

Author: Delena Feil

Last Updated:

Views: 6521

Rating: 4.4 / 5 (65 voted)

Reviews: 80% of readers found this page helpful

Author information

Name: Delena Feil

Birthday: 1998-08-29

Address: 747 Lubowitz Run, Sidmouth, HI 90646-5543

Phone: +99513241752844

Job: Design Supervisor

Hobby: Digital arts, Lacemaking, Air sports, Running, Scouting, Shooting, Puzzles

Introduction: My name is Delena Feil, I am a clean, splendid, calm, fancy, jolly, bright, faithful person who loves writing and wants to share my knowledge and understanding with you.