Broker and insurer representatives hope to stave off ECJ VAT ruling
Broker and insurer trade associations began lobbying the government this week to stave off the potentially disastrous effects of last week's European Court of Justice (ECJ) ruling on VAT exemptions.
Representatives from Biba, the London Market Brokers' Committee (LMBC) and the ABI met Customs and Excise in the first of several talks scheduled over the coming months before the European ruling is incorporated into UK tax rules.
Experts predict that insurers who rely heavily on outsourcing will be hit with VAT bills running into hundreds of millions of pounds. The impact on brokers is still uncertain.
David Hough, executive director of the LMBC, told Insurance Times: "It is not at all clear how this will impact upon the wholesale broking sector. Hopefully the optimists will be proved right, but it will depend upon the outcome of these talks."
Biba will go back to the European Commission and lobby for an amendment to the ECJ ruling if the outcome of discussions with Customs is unfavourable, Hough said.
Vic Thompson, chairman of wholesale broker THB Group, said: "I am quietly optimistic that common sense will prevail. The best policy may be just is to lie low and hope this blows over."
But others were more buoyant. IIB director general Andrew Paddick said: "I am 100% certain that customs won't charge VAT on wholesale broker's commissions."