Claims handling: Claims fulfilment and claims handling
The provision of claims fulfilment supplies (that is, the provision of goods or services to make good the loss which is the subject of the insurance claim) is always liable to VAT at the appropriate rate (see VATINS5610). This applies regardless of whether or not the fulfilment is supplied in conjunction with any claims handling services (whether under a delegated authority or not).
In cases where claims handling is supplied alongside claims fulfilment, exemption will only apply to the claims handling element when, in addition to the supply of fulfilment, there is a genuine separate supply of claims handling services (as outlined in VATINS5530) and a written delegated authority is in place.
If both claims fulfilment services and claims handling services are being supplied, the value of the fulfilment supplies must be charged for at a realistic rate and the value given to any claims handling services must not be unduly inflated at the expense of that for the supply of fulfilment.