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Potential To Estimate IPT For Forthcoming Increase In UK
The Association of British Insurers (ABI) is reporting that HMRC are willing to permit the submission of estimated IPT (Insurance Premium Tax) returns if insurers are experiencing issues implementing the forthcoming UK IPT standard rate increase (to 9.5%).
An insurer may be experiencing issues with updating IT systems ahead of the increase, for example. The estimated returns can only be submitted if an insurer has prior agreement with HMRC on an individual basis. Adjustments to these estimated returns will be made at a later date.
David Jordorson, Policy Advisor on Taxation at the ABI,said:
"Firms had no advance warning of the increase in Insurance Premium Tax announced in the Budget, meaning preparations for the implementation date of November 1st have placed sudden pressure on IT and back-office services.
"The ABI has been able to meet with HMRC and Treasury officials to explain the challenges being faced by insurers having to implement this change at relatively short notice. Allowing the use of estimated returns is a pragmatic response which should go some way to easing the transition for insurers."< /p>
Alongside the transitional arrangements for insurers filing UK IPT under the special accounting scheme, this news illustrates that HMRC are attempting to make the rate increase a smoother process for insurers than the last rise in January 2011, where insurers faced significant challenges to update their systems in time. The relatively short notice of this rate increase, on the other hand, provides its own challenges.
If an insurer has concerns over the upcoming rate increase and its effect on their reporting of UK IPT, they should contact HMRC to discuss the situation. TMF Group are assisting insurers with preparations for the rate increase and are able to offer advice to our clients as needed.