Tax on Insurance Claim

C

careywall

Registered User
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I am confused I have received a sum of money from the Insurance Co as a result of a claim when my van was a w/off. This was paid in the joint names of the leasing co & myself. The leasing co is accepting this but there is a balance owed to them which I must pay but they say I also owe vat on this amount. Is Insurance not exempt from vat? What is the Vat Situation?Can anyone explain please?
 
Hi CW Welcome to AAM I can tell you that there is NO VAT on insurance claims and/or premia There is VAT at the standard rate of 23 on leasing charges as I am sure you are aware Sounds to me like there is some shortfall in the payout & the finance co. are charging you the balance of remaining on the lease which would be subject to VAT This seems crazy as the van was written off. Were all the payments on the van up tp date at the time of write-off ?
 
Hi

Thanks for replies I am vat registered. I had to stop leasing repayments when van was w/off as I could not afford repayments. There is a shortfall OK would that be the reason they are adding vat?
 
The cheque from the insurance will not have a vat element .Say the van is valued at 8000 euro and the settlement from the leasing is about the same, then the insurance will pay up 6504.You will pay the leasing company 8000 euros,then receive a settlement invoice from the leasing company for 6504+VAT of 1496.You can put this invoice through your books and reclaim the vat of 1496 on your next vat return,so you are not out of pocket.
 
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