VAT payment for write-off?

vaio

Quentin wrote: »

If the OP's company car qualified for the VAT to be reclaimed, and is still owned by the business, and never used outside the business, then it is correct that the insurer is paying the value of the car net of the VAT!

(Insurers always treat the VAT element of a claim like this (ie they don't pay it) when dealing with claims from VAT registered policy holders, who are not disadvantaged by this)

That certainly applies (and makes logical sense) when the claim is for a repair and the repaired car remains in the ownership of the policyholder but I can't see how the same logic would apply on a total loss claim.

In the former, the repairing garage send a bill in which includes VAT, the insurer pays the net cost, the policyholder pays the VAT cost and then reclaims it on the next return so is not out of pocket.

On a total loss disposal I think the VAT element has to be accounted for by the policyholder with no method of reclaiming it so would end up out of pocket to the tune of about 17% of the payout hence my view that the payment should be £x + VAT

Bluefairy

Hi everyone, thanks very much for your responses. I'm sorry, I call it my car by habit but it is actually a 4x4 truck, exclusively for my work, you're right.

The insurer said they would give me £6700 + vat so that is £8040. I agreed that on the phone with them, And now, all of a sudden, they have decided they don't pay VAT. and so are saying they aren't paying £8040 and will only pay the £6700.

I don't have any document or handbook from them with full contract details - just the few pages and certificate they sent me when I originally took out the insurance with them

vaio

Bluefairy wrote: »

......I call it my car by habit but it is actually a 4x4 truck, exclusively for my work........

:rotfl::rotfl::rotfl:

how to render half the posts redundant in one easy step

Bluefairy

haha I'm sorry:embarasse

Guess I should see if the HMRC know then? Btw, the insurer is Zenith and from what I've found on other posts on here about them, they are a nightmare to deal with and lots of other people have had problems with them too:(

Quentin

Bluefairy wrote: »

Hi everyone, thanks very much for your responses. I'm sorry, I call it my car by habit but it is actually a 4x4 truck, exclusively for my work, you're right.

The insurer said they would give me £6700 + vat so that is £8040. I agreed that on the phone with them, And now, all of a sudden, they have decided they don't pay VAT. and so are saying they aren't paying £8040 and will only pay the £6700. ....

The insurer is correct.

When the company originally bought the lorry, they reclaimed the VAT via the VAT system. Thus the net cost to the business for the lorry was the ex VAT price.

Now it has been valued at £6700 + VAT.

So if the business now goes to buy a replacement priced at £8040 (inc VAT), the net cost for the business will be the £6700 they are paying you!