Accounting for Insurance Premium Tax: the cash receipt accounting method: purpose and outline of this section
When IPT was introduced, it was envisaged that the cash receipt accounting scheme would be the normal method of accounting for IPT. The special accounting scheme was introduced because of industry representations, but cash receipt accounting remains available to anyone who wishes to use it. In addition, this scheme has to be used by anyone that does not opt to use, or that has been excluded from, the special accounting scheme.
Legal basis for the basic cash receipt method
The legal basis for the cash receipt method of accounting for IPT is part of the basic legal provisions establishing the tax.
The Finance Act 1994, Section 49 says:
|Tax shall be charged on the receipt of a premium by an insurer if the premium is received-|
(a) under a taxable insurance contract, and
(b) on or after 1st October 1994. | | ————————————————————————————————————————————————————————– |