VAT and Insurance Agents

T.C.

I have been asked what the procedure is for VAT and insurance agents. I don't know anything about this field of VAT, but they have told me that if a claim is made and the claimant is VAT, then the VAT is 'skipped' passed the agent and straight to the claimant to reclaim. Does this make sense and what is the actual procedure for this? Not planning to use this - my student just wants to understand it.

Jan

Yes this does make sense. I've only seen it when a client has made a claim - the insurance company only pays the net amount of the claim and the VAT element is claimed by the insured. My daughter is a claims handler and as far as I am aware they deduct the VAT and any other non-claimable amounts (she deals with horses and people try to put all sorts through that is not claimable!).

If you think about it the insurance company is only refunding the costs to the claimant, and if the VAT is able to be reclaimed then it isn't a cost.