VAT on insurance excess?

10110527 Registered Posts: 16 New contributor 🐸
One of my clients(a VAT registered company) has just invoiced an insurance company for building repairs inc. vat. The company have declined paying the invoice until the excess amount of £100 is deducted from the invoice. This is fine, but I haven't processed one of these for some years and just need clarification please - e,g, the original claim is £1000+£200 vat = £1200. Is the insurance company invoiced for £1100 and the policy holder £100(for the excess)i.e. would the invoice look like this:-

work carried out £1000
VAT £200
Total £1200
Less excess £100
Invoice amount £1100

Then an invoice to policyholder for £100 with no vat element? I've tried to contact HMRC but the strike means they are taking an age to answer calls!

Thank you!


  • Dcollins
    Dcollins Registered Posts: 179 Dedicated contributor 🦉
    If it helps, I've been on the other side of the fence many times. As the policy holder we'd receive an invoice for the excess and VAT, ie. £100 plus £200.

    The insurance company would be invoiced for £900, and wouldn't pay the VAT.
  • Monsoon
    Monsoon Registered Posts: 4,071 Beyond epic contributor 🧙‍♂️
    Spot on.

    The insurer pays the net, less the excess (£900)

    The insured pays the excess (£100) and the VAT (£200)
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