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HMRC internal manual

VAT Partial Exemption Guidance

Guidance for specific trade sectors: Lloyd's VAT arrangements: other issues

Input Tax - Claims expenses (“tabulation figures”)

The input tax on services supplied from within the UK in relation to claims will only be regarded as recoverable by the syndicate if the supply is to the syndicate and if the insured in relation to the claim belongs outside the EU. Such input tax is directly attributable to outside the scope supplies with input tax recovery under the terms of the Specified Supplies Order 1999. The evidence to substantiate input tax claims by syndicates is the Underwriters’ Signing Message (USM).

The information contained within the USMs will be substantiated by LPSO upon requests made by HM Revenue & Customs to Lloyd’s via procedures agreed with Lloyd’s.

LPSO will retain the original invoices or their scanned images for the period required under prevailing VAT legislation and make them available upon request.

Imported services

LeBoeuf Lamb Greene & MacRae

Fees charged by the US firm of LeBoeuf Lamb Green & MacRae are paid centrally by Lloyd’s and recharged to the syndicates. The invoices produced by Lloyd’s may be treated as invoices for the purposes of calculating the VAT charges under the reverse charge procedure. The fees charged to syndicates relate to a number of supplies and cannot at this time be directly attributed to specific supplies of insurance. Therefore the fees are regarded as residual and input tax may be recovered at the appropriate syndicate rate.

Gross net claims

Monthly summaries will be made of the values of claims costs processed by LPSO on behalf of syndicates.

A proportion of the services received in dealing with claims are supplied from overseas and are subject to the reverse charge procedure. To arrive at the value of the international services a survey is to be conducted periodically. The procedure and intervals will be as agreed with Lloyd’s. Lloyd’s will advise syndicates of the prevailing percentage figure.

Syndicates will apply the percentage to the gross net claims figures to arrive at the notional net value of reverse charge services. The VAT rate will be applied to the calculated figure to arrive at the output tax to be declared. The associated input tax will be recovered at the syndicate recovery rate.

Tax point

The tax point is taken as the last working day of the relevant month.