Special arrangements for certain professions or trades: Warranty sales
If a retailer sells an insurance product as part of his supply of goods or services, for example an extended warranty with a domestic electrical appliance, then officers must consider the VAT/IPT implications of such supplies. For example:
- is the warranty underwritten by an authorised insurer or is it merely an in-house guarantee?
- if the former, does the higher rate of IPT apply?
- does the retailer receive a commission from the insurance company or charge a fee to the customer (the insured) for arranging supplies of insurance as a third party?
- are any insurance-related charges disclosed/evidenced?
Any fee or commission charged by the retailer as in the first bullet point above is consideration for a supply of services and, depending on which scheme is used and whether the recipient of the supply is a taxable person, may need to be accounted for outside the retail scheme.