Tax
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IPT Consultation
HMRC has launched a consultation into the current operation of Insurance Premium Tax “IPT”. The objective of this consultation, like all HMRC consultations, is to gather information from the affected parties before implementing revised legislation that brings into effect the proposed changes.
With a lot of consultations HMRC has already determined that it will be acting to make changes and the consultation is about ensuring those changes are appropriate.
The scope of the consultation into IPT considers a number of issues that HMRC perceive with the current system. We have highlighted the key areas for consideration below:
Intermediary issues
Collecting IPT from the broker, where the insurer is not registered for IPT, it is proposed that the burden for collection and potential exposure to IPT may fall onto the broker (this could encourage overseas insurers to not register for IPT). The implications of these changes are to increases the responsibility of the broker to ensure that the insurer is actually registered for IPT or potentially be liable for the collection and administration of IPT itself.
Removal of administration fee exemption from IPT, currently administration fees charged on a separate contract from the contract of insurance are not subject to IPT, this proposal would remove that and so increase the IPT due through all brokers who charge their administration fee on a separate contract.
Risk carrier Issues
The IPT return, could be expanded to include gross premiums on worldwide risks (instead of just premiums on UK based risk). This would increase the administrative burden on insurers already reporting IPT.
Online IPT register, a publically available list of everyone registered for IPT.
At this stage HMRC is seeking representations on these matters in order to determine its course going forwards. The consultation closes on Wednesday 17th July. We would then expect than any changes to IPT would be legislated for as part of the next budget.
If the current changes, as proposed, are introduced it could increase the costs to both brokers and insurers of the actual IPT liability, as well as the costs of administration and monitoring of their IPT obligations.
HMRC consultations are open to anyone to look to respond to, therefore please find below a link to the consultation on the government website. Should you wish to respond to the consultation directly the deadline for submissions is on Wednesday the 17th of July.
https://www.gov.uk/government/consultations/call-for-evidence-the-operation-of-insurance-premium-tax
Or alternatively, if you would like to talk with one of our tax team please contact Matthew Pert.