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HMRC internal manual

Debt Management and Banking Manual

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

As a last resort we may require the insured person (under taxable contract) to pay thedebt. This only applies in cases where the insurer has no business establishment in the UKor other fixed address in the UK and fails to appoint a UK tax representative.

Regulation 35 (2) of the Insurance premium Tax Regulations 1994, provides:

“Where this regulation applies –

a). the Commissioners may assess to the best of their judgment the amount of any tax duein respect of premiums received by the insurer under the contract after the material dateand before the date of the assessment; and,

b). the amount so assessed shall be deemed to be the amount of tax due in respect of thatcontract for the period by reference to which the assessment is made.”

Regulation 36 of the Insurance Premium Tax Regulations 1994, provides:

“Where the Commissioners make an assessment under regulation 35 and notify it to theinsured person, or each of the insured persons, on whom a liability notice in respect ofthe contract has been served –

a) the insurer; and

b) the insured persons mentioned in this regulation,

shall be jointly and severally liable to pay the amount of tax assessed, to the extentthat the assessment has not subsequently been reduced or withdrawn, and that tax shall berecoverable accordingly.”

The local IPT officer will issue notice of liability to the insured person. There can beno liability for the insured to account for tax until the notice is served. Then the IPTofficer will issue an assessment under Regulation 35 of the Insurance Premium TaxRegulations 1994.

The insured person has 30 days to pay the amount due. It makes no difference is theinsured has already accounted to the insurer for the tax due. If the insured person paysthe tax assessed by the liability notice the insurer is liable to pay this amount andinterest at the appropriate rate to the insured, under Regulation 39 of the Regulations.

We do not register the insured person for IPT. There is no requirement to render a return.We require the insured person to pay the assessment.

Contact the Insurance Team HQ Policy before taking any action under this paragraph.