One of my client's has had an accident in his company car which was the fault of the other driver. Repairs have been completed as agreed with the other driver's insurance company.
However, the client has now received an invoice from the insurance company for the VAT element of the cost of the repairs.
Can alyone please confirm if this is correct. I could understand if the accident was his fault and the claim through his own insurer! I have escalated this with the insurance company but thought you may be able to provide some advice.
It is normal for a VAT registered person to get an invoice for the VAT. It does not cost the client anything (apart from his time processing the paperwork!!) as he will reclaim it on the VAT return. The insurance company cannot reclaim it but your client can.
Having spent many years in the motor trade, it was always difficult to get customers to comprehend this.
Extract from HMRC
Reclaiming VAT on insurance claims
If you have an insurance claim that involves goods or services that are liable for VAT, you'll normally be invoiced directly for the VAT element if you're VAT-registered. For example, a garage that carries out repair work on your car will invoice the insurance company for the cost of the work and parts excluding VAT. They'll invoice you separately for the VAT.
Have to say, Bill, I am impressed by your knowledge of VAT rules and regs. Seems to me is a more complex area of legislation and practice than maybe anything else bookkeepers have to deal with, true? Did you build this knowldge up by experience (eg your years spent in the motor trade)? Is there an easily accessible and easily understandable store of info that anyone can tap into?
since we talking tax quick one for you, friend got an invoice from customs for goods he bought from another country. Now this had a VAT element also woud you be able to claim this back as well as he is VAT registered???
Presume this is outside of EU, if so, yes you can reclaim this VAT. The customs or freight company should send you a C79 certificate to enable you to do this.
Sorry for not replying earlier, been away for a few days.
Alfred - Sheila has covered your question.
Phil - I agree, tax rules (VAT/ PAYE etc) are the hardest thing to get your head around.
Not that knowledgeable on VAT & regs. In this particular case I know this from experience but what I normally find myself doing is , if I come a cross a situation, or someone asks the question on the the forum that I'm unsure of myself, I will research the answer.
In things tax related it is usually HMRC, and as the search facility is pretty rubbish, it often means I end up reading about something else, before I find the answer I'm looking for. Usually in doing so, it is inevitable that you pick up other knowledge along the way.
What's the saying? "Experience is something you get, when you are looking for something else"
