The biggest VAT issue in these sectors is the fact that VAT on costs that relate to VAT exempt sales cannot be reclaimed. VAT costs may be kept to a minimum by:
- ensuring that VAT is not charged by suppliers who do not need to add VAT to their bills;
- attributing VAT on costs to transactions that give a right to reclaim VAT;
- ensuring that all transactions that give VAT recovery rights are identified and properly valued;
- using a VAT recovery method that is appropriate for the business and which delivers the correct outcome without being administratively burdensome;
- applying VAT self-assessment rules correctly, for example on imported services; and
- structuring and processing insurance claim related costs to allow recoveries by the insured.
Constable VAT currently acts for a diverse range of organisations in the insurance and finance sectors, including Lloyd’s syndicates, syndicate managers P&I Clubs and P&I Club managers and overseas banks. In our experience, ensuring proper compliance and maintaining professional relationships with HMRC based on trust are the main aims of our clients. We have delivered large VAT savings to clients in these sectors, but all have been agreed with HMRC without conflict.
A number of changes in VAT accounting rules in recent years have had an impact and increased costs and complexity. These include, but are not limited to, the classification of VAT groups and the treatment of overseas branch income.
Since the UK left the EU on 31 December 2021 there are additional risks and opportunities that must be addressed. This has resulted in a great deal of complex work in relation to cross supplies to new EU entities and changes to group dynamics.