Budget 2018: the chancellor has announced changes to the VAT specific supplies anti-avoidance, to counteract VAT avoidance in the insurance sector.
The changes will take effect from 1 March 2019 and are intended to prevent offshore ‘looping’ in the insurance sector.
Offshore 'looping'
- Where a business makes insurance related supplies, or intermediary services related to insurance, to UK customers, that supply is exempt from VAT and the VAT on costs is irrecoverable.
- If instead, a non-EU intermediary was used this can result in a recovery of VAT due to the VAT (Input Tax) (Specified Supplies) Order 1999.
Under the proposed rules, VAT recovery will be restricted on insurance intermediary supplies where the principal supply is made to UK customers.
Useful links:
External link
HMRC: Changes to the VAT specific supplies anti-avoidance
