Car insurance - I pay the VAT for a claim?

JacWoo26

Hi
I followed all the great advice on this site and recently moved to hastings direct. Unfortunately we have to now make a claim as my daughter (age 3) scratched/drew all down the side of the car with a stone!

Hastings have said not only do we pay the excess we also pay the VAT of the claim. I have never heard of this before - anyone else?? They have also selected their preferred repair shop which is quite a lot more than a quote we got direct from a dealership.

Any advice/views appreciated.

JW

MWTaylor

From what I know VAT doesn't come into any Insurance Policies.

It's something called IPT (Insurance Premium Tax) and what they said, as far as I know, it's completely incorrect. Ring them up and ask them again, if they fail to deal with it, let them know you will write to the FSA. That should make them pull their finger out

Good luck!

dacouch

I'm guessing that your VAT registered, am I right?

JacWoo26

No! I am a normal employed person. When Hastings wrote regarding my claim they said 1) you pay your £400 excess and 2) you pay to the garage the VAT the garage are going to charge for the claim.

V strange!

FlameCloud

MWTaylor wrote: »

From what I know VAT doesn't come into any Insurance Policies.

It's something called IPT (Insurance Premium Tax) and what they said, as far as I know, it's completely incorrect. Ring them up and ask them again, if they fail to deal with it, let them know you will write to the FSA. That should make them pull their finger out

Good luck!

You have no idea what you are talking about. IPT is something that is charged on premiums.

VAT would be deductable from the claim if the payee of the cheque is VAT registered, as you would be able to recover the VAT element in your tax return.

FlameCloud

JacWoo26 wrote: »

No! I am a normal employed person. When Hastings wrote regarding my claim they said 1) you pay your £400 excess and 2) you pay to the garage the VAT the garage are going to charge for the claim.

V strange!

In this case it is very strange. Have you requested a cash settlement? Or is it one of their nominated garages?

JacWoo26

Hi
I've just been back to the letter as I thought this was mad and in the small print it states the VAT element is if I have a VAT registered business - you are right. Why they didn't they say that in the first place?!! thanks for your responses. I assume therefore I don't have to pay any VAT!

JW

dacouch

Insurers are not VAT registered so they cannot reclaim VAT, so if you are VAT registered they do not pay the VAT element of the bill and leave it for you to reclaim.

Ring Hastings and explain you are not vat registered and they shopuld send you the vat

Quentin

dacouch wrote: »

Insurers are not VAT registered so they cannot reclaim VAT

Not really.

Insurers are VAT registered.

However insurance premiums are not subject to VAT, and consequently insurance companies (unlike normal vat registered businesses) do not "collect" VAT and consequently cannot reclaim the VAT they pay out on garage bills.

This is why VAT registered policyholders are required to pay their VAT on claims (involving cars used by their VAT registered business). They subsequently reclaim it via the VAT systems.

If you are VAT registered beware a situation where you are involved in a claim over a vehicle you have which is nothing to do with your business. In these cases you need to point this out to the insurer so that they don't expect you to pay the VAT on repairs, as you would not be able to put the VAT "through the business" and reclaim it.