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taxadvisor.uk, Chartered Certified Accountant
Category: Tax
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We invoiced insurance company VAT and they didn't pay the

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Hi, we invoiced insurance company VAT and they didn't pay the VAT as they cannot reclaim it. They say we can reclaim it as input tax but I am not sure how.
Assistant: Thank you. Can you provide any more details to help us find you the right Expert?
Customer: So for now we have an invoice in our system with output tax but I am not sure how to transform it to input tax
Submitted: 1 year ago.
Category: Tax
Expert:  taxadvisor.uk replied 1 year ago.

Thank you for your reply..

Please advise how you dealt with the charges from the supplier which were recharged to the insurance compnay as a cliam..

Many thanks

Customer: replied 1 year ago.
Because this was our first case dealing with insurance after being VAT registered I have put the charges as input tax from our supplier. Put it is just for one part, so perhaps it's better to cancel it in the system? Because I've read a brochure from HMRC stating that I cannot reclaim the VAT in that instance.
Expert:  taxadvisor.uk replied 1 year ago.

Thank you for your reply

Here is a link to VAT manual VAT13500 on VAT input tax basics - insurance claims.

It states "Subject to the normal rules a VAT registered policy holder may treat any VAT incurred on the supply as input tax. The insurer will normally pay the policy holder compensation exclusive of VAT. The policy holder will pay the supplier the tax and recover it as input tax."

https://www.gov.uk/hmrc-internal-manuals/vat-input-tax/vit13500

Your invoice to the insurance company should not have VAT added to it.

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 1 year ago.
should I simply change in sage from "20% VAT" to "Exempt from VAT" ? And that solves the problem? And next time I am invoicing the insurance company for a VAT registered customer I simply use exempt from vat?
Expert:  taxadvisor.uk replied 1 year ago.

Thank you for your reply.

That corerct..

I hope this is helpful.

I will appreciate if you would kindly rate my service/accept the service I have provided before you leave the site, to ensure I get credited for it by Just Answer.

Customer: replied 1 year ago.
I am not sure about the statement "The policy holder will pay the supplier the tax and recover it as input tax." In this case we invoiced insurance for the repair of our vehicle. So we should be liable for vat, or simply we just erase the vat on the invoice?
Customer: replied 1 year ago.
Because in this case we are policy holder as well as the supplier
Expert:  taxadvisor.uk replied 1 year ago.

Thank you for your reply..

You had stated earlier "after being VAT registered I have put the charges as input tax from our supplier."

It would imply that you received a VAT invoice from the supplier.. This is your input tax and you should be able to reclaim it in your VAT returns.

If you are raising an invoice to the insurance company for this claim to be reimbursed, then you raise an invoice excl VAT.

I hope this is helpful.

taxadvisor.uk and other Tax Specialists are ready to help you
Customer: replied 1 year ago.
That's great. I get it now. Thanks.
Expert:  taxadvisor.uk replied 1 year ago.

I thank you for accepting my answer.

best wishes

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