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Insurance Tax not due on costs billed to taxi drivers

  • GB
  • January 26th 2021
  • By Mark Cranwell

The Appellant in this case hires taxis to drivers. It has an insurance contract with a third party insurer for the taxis, and along with the charge for taxi hire, the Appellant collects a proportion of the cost to it of insurance from the taxi driver. The Appellant sought a refund of VAT overpaid on the VAT-exempt insurance element, but the tax authority (HMRC) assessed the Appellant for Insurance Premium Tax (IPT) on those amounts. However, the First Teir Tribunal (FTT) held that the Appellant is not registrable for IPT because, although it provides insurance for the taxis as part of its business, it does not provide that insurance under a contract for insurance with the taxi driver, and a contract for insurance is required for IPT purposes (GB Taxi Services Ltd [2020] UKFTT 507 (TC)).

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