Insurance
Currently VAT Act 1994, Sch 9 Group 2 Item 1 exempts from VAT insurance and reinsurance sold by insurers who are authorised by the Financial Services Authority. The law is being amended, in order to remove this restriction, and confirming Customs' change of policy following the House of Lords decision in Card Protection Plan v CCE [2001] STC 174.
Insurance
Currently VAT Act 1994, Sch 9 Group 2 Item 1 exempts from VAT insurance and reinsurance sold by insurers who are authorised by the Financial Services Authority. The law is being amended, in order to remove this restriction, and confirming Customs' change of policy following the House of Lords decision in Card Protection Plan v CCE [2001] STC 174.
The revised law will come into effect from 1 January 2005. In summary, the VAT exemption is extended to businesses that procure insurance cover under a block policy, under similar circumstances to Card Protection Plan, or to businesses who provide insurance that have not previously been authorised to do so by the FSA, in addition to authorised insurers. Other than implementing the Card Protection Plan decision, the new wording does not change the scope of the UK exemption for insurance. Minor consequential amendments are also being made to the VAT (Special Provisions Order) 1995, and the VAT (Cars) Order 1992, to remove references to insurers authorised under the Financial Services and Markets Act 2000.
Although the VAT exemption is being amended, to remove the requirement to be an authorised insurer, businesses in the UK that want to provide insurance must still generally be authorised and regulated by the Financial Services Authority. The requirement for authorisation is not changing. If Customs discover any unauthorised businesses supplying insurance or reinsurance, they have the ability to report the business to the Financial Services Authority.
(Customs Business Brief 34/2004 dated 15 December 2004.)
