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HMRC internal manual

Insurance Premium Tax

Insurance premium tax: Calculating the value of the premium: Intermediaries: Commissions

In a chain of intermediaries, each one may add on a profit element (mark-up) to the premium they charge to the next intermediary or the final customer. Some categories of business, such as retail holiday cover of the kind sold by travel agents, could involve anything up to four intermediaries between the underwriter and the final customer. Each one can then take their commission (equal to the mark up), before passing the premium up the chain until it arrives with the insurer. We expect IPT to be accounted for by the insurer on the full gross premium charged to the customer, unless it can be shown that any charge made by an intermediary is made under a contract which is separate from the insurance contract, see IPT05160 for more information. The audit assurance considerations applying to this type of arrangement can be found in IPT08455.