VAT on insurance excess?

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10110527
10110527 Registered Posts: 16 New contributor 🐸
in General accounting discussion
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!

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  • Dcollins
    Dcollins Registered Posts: 179 Dedicated contributor 🦉
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    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 🧙‍♂️
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    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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