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URGENT - IPT on fees charged under a separate contract in connection with personal lines insurance

It is our understanding that with affect from 9/12/09 any fee charged (other than a VAT'able fee) to a consumer (an individual buying insurance in a personal capacity) at inception or renewal, is immediately subject to IPT.

The Chancellor brought in the IPT anti avoidance measure in his 2009 PBR to close the loophole following the HomeServe case.

We understand the position is that IPT will require to be reported and processed through the insurers.

We are awaiting clarification from HM Revenue and Customs (HMRC) as this has very serious cost implications.

HMRC has issued the draft legislation and explanatory note on its website which can be viewed here

http://www.hmrc.gov.uk/pbr2009/supplementary.htm

Legislation will be introduced in Finance Bill 2010 effective from 9 December 2009 to close an avoidance scheme involving an ‘administration fee’ charged under a separate contract.

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