Backdated IPT to be collected by insurers is admin nightmare
The British Insurance Brokers’ Association (BIBA) has warned brokers to stop charging fees to personal lines customers if they cannot keep records to help insurers pay Insurance Premium Tax (IPT) imposed in the pre-budget report.
In a Q&A to members BIBA said: “IPT is included on fees from 9 December 2009. If your systems cannot accommodate this yet, we can only suggest one of two options – either keep manual (paper) records of fees or stop charging fees until your system is ready.
“With effect 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 draft legislation excludes mid-term changes and cancellations.
- The IPT on fees will be collected by the insurers and passed on to HMRC.
BIBA is meeting HMRC on 18 December 2009 and has also met with the Association of British Insurers (ABI) and the Institute of Insurance Brokers (IIB).
BIBA said : “We will continue to make two broad points to HMRC. Firstly, the draft legislation has huge unforeseen consequences and there must be a better and more appropriate way to prevent a repetition of the Homeserve premium-splitting.
“Secondly, we will argue that an intermediary’s contract for services is a separate contract, is nothing to do with the insurer and that if HMRC want to apply IPT to the intermediary’s costs then these must be collected directly from the intermediary.”