Motor RTA - insurer asking if I'm self-employed before issuing cheque

[Firefly]

Hi,

I was involved in a minor RTA. The other party has agreed liability and their insurance co is ready to send me the cheque to cover the repair. The insurer has enquired about whether I'm registered for VAT (self-employed). I am, but just wondering why this info is required?

Thanks
F

 

[DB74]

If you are registered for VAT and can reclaim the VAT then the VAT element of the repair is paid by you and then reclaimed by you on your VAT return as normal. The insurance company then only pay you the net element of the repair bill. This is because insurance is a VAT-exempt activity so the insurance company cannot reclaim the VAT on the repair bill.

If you are not registered for VAT or cannot claim back the VAT on the repair because it is not business related then the insurance company bears the full cost of the bill

 

[Firefly]

Thanks for that. Does it make any difference if the car is not a company car?
Thanks

 

[T McGibney]

If you are registered for VAT and can reclaim the VAT then the VAT element of the repair is paid by you and then reclaimed by you on your VAT return as normal. ll

Take extreme care with this advice. Depending on the circumstances of the incident giving rise to the claim, and the nature of the VAT-registered person's business, Revenue may well disallow a claim for refund of the VAT element of the repair cost.

Individuals would be well advised to clarify their own individual position with Revenue before accepting the insurance company's word on this. I know of cases where the insurance company ended up paying out on the VAT-inclusive cost, despite first trying to convince the punters to shoulder the VAT element, because the punters sought clarification from Revenue before agreeing the settlement.