Parcelforce Added Protection VAT question

MartinH67

Occasionally I add extra protection to parcels I am shipping for my business (using a "domestic" account) with Parcelforce Worldwide. Just noticed this morning that they are adding VAT to the additional premium cost.

As I understand it this is a form of insurance and would be subject to Insurance Premium tax of 12% at most.

Theoretically it doesn't affect me as I am VAT registered and I can see why there is 20% VAT in the original "base" price as this a service and they include protection up to £150 "free".

A question if someone can answer

Are they charging correctly ?

MyRealNameToo

https://forums.moneysavingexpert.com/discussion/6679321/parcelforce-added-protection-vat-question

Its not legally insurance just an increase in the maximum liability and hence subject to VAT rather than IPT and as a VAT registered person thats a good thing for you as you can recover the VAT whereas couldnt have recovered the IPT.

MartinH67

https://forums.moneysavingexpert.com/discussion/comment/82097894#Comment_82097894

That's really helpful - Thank You - For a moment I thought I had stumbled across something.

MyRealNameToo

https://forums.moneysavingexpert.com/discussion/comment/82097961#Comment_82097961

There are lots of things people call insurance (warranties, CDW, parcel protection) which legally arent and some companies go to some extremes to ensure they cannot be classified as insurance. The world changes massively if you are selling a product thats deemed insurance, particularly if you are the ones taking on the risk of making the payouts. Everything gets more expensive