The UK’s HM Revenue and Customs is undertaking a call for evidence to better understand how the administration and collection of Insurance Premium Tax (IPT) can be made more efficient for both business and HMRC. It also wants to identify unfair tax outcomes so these can be addressed.
The closing date for comments is July 17.
Captives are currently not required to report the identity of their parent entity, but HMRC is proposing changing this, to better understand the business of insured parties and the types of risks being underwritten.
HMRC is also looking at business practices involving administration and arrangement fees which may be leading to unfair tax outcomes in the insurance industry. It is proposing bringing certain administration fees into the scope of IPT, collecting more information on insurers’ exempt written premiums and removing the requirement for each member of a group IPT registration to have a UK resident director.
There have been a number of changes to the process of collecting IPT over the past 25 years, noted HMRC. In 1997 there was an increase in the IPT rate, while protected cell companies were added in 2003. In 2010 a loophole for commoditied insurance was closed.
HMRC said it was committed to modernising the rules as needed to reflect commercial, regulatory, and other wider developments. “We want to make it as easy as possible for taxpayers to pay the right tax at the right time, while also exploring options for addressing instances of unfair outcomes,” it said.
HMRC, UK, Insurance Premium Tax