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HMRC internal manual

Debt Management and Banking Manual

From
HM Revenue & Customs
Updated
, see all updates

Debt and return pursuit: Insurance Premium Tax: Who is liable to pay the debt? The Tax Representative

An overseas insurer or taxable intermediary doing business in the UK must be a corporatebody. It must appoint a tax representative who is resident in the UK if it

  • does not have a place of business in the UK
  • is not incorporated in the UK but
  • is doing business in the UK.

The insurer or taxable intermediary is an unregistered trader until a representative isappointed.

The tax representative is liable with the insurer or taxable intermediary for IPT and thisliability extends to IPT due in periods before the date of the tax representative’sappointment. Section 58 (1) of the Finance Act 1994, provides:

“Where a person is an insurer’s or taxable intermediary’s taxrepresentative at any time, the tax representative –

shall be entitled to act on the insurer’s or taxable intermediary’s behalf forthe purposes of legislation relating to insurance premium tax,

  • shall secure (where appropriate by acting on the insurer’s or taxable intermediary’s behalf) the insurer’s or taxable intermediary’s compliance with and discharge of the obligations and liabilities to which the insurer or taxable intermediary is subject by virtue of legislation relating to insurance premium tax (including obligations and liabilities arising before the person became the insurer’s or taxable intermediary’s tax representative, and
  • shall be personally liable in respect of any failure to secure the insurer’s or taxable intermediary’s compliance with or discharge of any such obligation or liability, and in respect of anything done for the purposes connected with acting on the insurer’s or taxable intermediary’s behalf
  • as if the obligations and liabilities imposed on the insurer or taxable intermediary were imposed jointly and severally on the tax representative and the insurer or taxable intermediary.”

Although the insurer is required to nominate a tax representative, it is the insurerwho is registered for IPT.

As a matter of policy, take recovery action against a tax representative only when actionagainst the insurer or taxable intermediary is exhausted and a debt for which the taxrepresentative is liable remains unpaid. Verify the tax representative’s status byreferring to:

  • form IPT 1; or
  • a letter signed by the authorised officer (the insurer) confirming his official representative status.

It is good practice to notify a representative of his liability under the Act where westart proceedings against the insurer or taxable intermediary.

The provision for mutual assistance between member states in the European Union in therecovery of tax debts extends to the collection of Insurance Premium Tax debts.