VATINS6050 - Supplies of insurance and related services outside the UK: input tax recovery on insurance and related services

Input tax may be deducted on insurance and insurance related services when:

• the recipient of the supply of insurance belongs outside of the UK; or

• the recipient of the supply of related services belongs outside of the UK and the party to be insured under the contract of       insurance belongs outside of the UK; or

• related services are supplied in connection with a contract under which the insured party belongs outside the UK (even if the insured party is not the recipient of the supply of related services); or

• the insurance being supplied is directly linked to the export of goods to a place outside the UK; or

• related services are supplied in connection with insurance directly linked to the export of goods outside the UK.

The Specified Supplies Order was amended with effect from 1st March 2019 to restrict input tax recovery where the party to be insured belongs in the UK. Prior to this date, deduction was allowed on related services supplied to recipients belonging outside of the EU regardless of where the party insured under the contract of insurance belonged.

In all other circumstances, there is no right to input tax recovery on insurance or insurance related services.

With effect from 1st January 2021 the Specified Supplies Order was amended to extend the exempt with recovery VAT treatment, to specified supplies made to customers in the EU.