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HMRC seeks views on operation of Insurance Premium Tax

HMRC seeks views on operation of Insurance Premium Tax | Insurance Business

HMRC seeks views on operation of Insurance Premium Tax

The UK’s taxman has launched an open consultation into how the Insurance Premium Tax (IPT) operates as part of efforts to ensure fairness and efficiency.

Closing on July 17, the call for evidence is focused on examining the administration and collection of IPT as well as the existence of unfair tax outcomes. HM Revenue & Customs (HMRC) stressed that current IPT rates and exemptions are not part of the review’s scope.     

“In recent years, there have been a number of changes in the way the insurance market operates, reflecting commercial, regulatory, and other developments,” noted the HMRC in its consultation document seen by Insurance Business.

“We are aware that in some instances these may give rise to unintended tax outcomes, particularly when coupled with developments in tax case law. The government is therefore conducting this call for evidence to gather further information and ideas on options to modernise the operation of IPT.”

Policy areas under review include administration and arrangement fees, the IPT return, tax collection from the insured and the broker, as well as the issue of unregistered insurers. Meanwhile one of the ideas floated by the government is the possible creation of an online IPT register.

“There is currently no publically accessible way for brokers or consumers to verify whether an insurer is registered to pay IPT,” stated the tax authority. “This prevents stakeholders from easily identifying insurers that are failing to register and pay IPT. It also potentially enables the use of non-compliant insurers and allows for the undercutting of compliant companies.

“We are seeking views as to the degree to which the provision of a public register would help to prevent unfair outcomes in the insurance market and act as a deterrent to unlawful activity, as a result of the additional compliance activity it would enable.”

In total, the HMRC has outlined 17 questions in its consultation document. Those who wish to submit their responses may do so until 11:45 pm of July 17.