Legality of Quinn's €300 household insurance offer

[Jethro Tull]

For those of you that don't know about it already details are here:



I was just wondering about the legality of this offer from a tax point of view. If you buy a motor policy and health policy there is a cross subsidy (these 2 policies are subsidising the Quinn household book). Nothing wrog with that you might think. However health premiums are quoted net of tax relief. Health insurers then get the tax relief from the revenue as the rest of the actual (gross) health premium. Is there not a case here where tax relief on health insurance is being used to cross subsidise Quinn's household book and if there is then this is surely illegall? I asked a few people in the compliance department in my company and they definately think there is an issue to be investigated here.

Anyone on here with legal expertise (I have zero!) who have an opinion on this?

 

[ClubMan]

Health insurers then get the tax relief from the revenue as the rest of the actual (gross) health premium.

Are you sure? Isn't it a case of the consumer getting tax relief at source on the gross premiums paid. Where there is no premium paid such as where the underwiter offers free cover there is presumably no tax relief.

 

[Jethro Tull]

Must say I'm not sure about the actual transfer of tax relief or how the premium is paid but if the premium is paid from your gross salary (therefore giving you a tax benefit) the same point holds. My first post wasn't really thought out properly (I may well be mistaken on how I said the tax relief is transferred), just wanted to ask the question.

What I'm trying to say is that the bottom line is that the tax relief on the premium is being used by Quinn to cross subsidise his household insurance book. Whether this is intential or not (I would say its not intential) is a different matter but the area is pretty grey to me. I may well be barking up the wrong tree, just got thinking about it the other day.

 

[ClubMan]

What I'm trying to say is that the bottom line is that the tax relief on the premium is being used by Quinn to cross subsidise his household insurance book.

You are assuming that QL are somehow grossing up the €300 to €375 ((€300 / 8) x 10) by claiming €75 tax relief in respect of that granted to the customer on the premium even though this premium of €300 was not actually paid because it was a freebie. I very much doubt that they are doing this. Why do you think that they may be? It's a very serious issue to be insinuating that a named company may be engaging in tax evasion/fraud so you would want to back this up with some hard evidence before going any further with it!

 

[Jethro Tull]

I do not feel they are purposely engaging in tax evasion and/or fraud. I don't think this offer was designed for this purpose, but i certainly feel there is an issue here.

What is happening is that quinn have a '3 for 2' offer of sorts. Part of the premium being paid for the 3 policies is tax relief (on the health insurance). Seeing as household insurance is not eligable for tax relief surely there is a tax issue here?

As I said previously I am not from a legal background so am just asking anyone who has legal expertise for their opinion (seeing as the compliance dept in my company certainly thought there is an issue here). This may NOT be an issue at all, I'm just wondering what the legal eagles opinions are

 

[MugsGame]

Clubman I think you are missing the point. Quinn are bundling free home insurance with a product where tax relief is available. They can increase the medical insurance premium to compensate for revenue lost on the household side, effectively using tax relief one product to subsidise the cost of the other product.

I think Quinn are ok on two counts
- it's clever tax planning to exploit this loophole (avoidance not evasion)
- their medical premiums are still cheaper than competitors, so they aren't gaining an unfair competitive advantage

 

[Jethro Tull]

Clubman I think you are missing the point. Quinn are bundling free home insurance with a product where tax relief is available. They can increase the medical insurance premium to compensate for revenue lost on the household side, effectively using tax relief one product to subsidise the cost of the other product.

I think Quinn are ok on two counts
- it's clever tax planning to exploit this loophole (avoidance not evasion)
- their medical premiums are still cheaper than competitors, so they aren't gaining an unfair competitive advantage

This was the reason I was really left scratching my head about the issue and why the 'issue' may not be an issue at all!

 

[ClubMan]

Clubman I think you are missing the point. Quinn are bundling free home insurance with a product where tax relief is available.

Yes - I did miss that point - I thought that it was free health insurance for taking out home insurance and not the other way around! Apologies.

They can increase the medical insurance premium

I thought that private health insurers had to get permission from the HIA or Minister for Health before changing (increasing?) their prices?