A tax tribunal is set to deliver a verdict by the end of June over a long-running tax dispute between general insurance provider
Hastings and HM Revenue and Customs (HMRC). The insurer hopes to get as much as £20 million in tax rebates.
The tax battle revolves around whether the East Sussex-based company should be allowed to reclaim the VAT it is charged on goods and services purchased in the UK, according to a report by the Sunday Times. Hastings argues that underwriting activities occur at Advantage, Hastings’ sister company in Gibraltar, and that the UK division merely acts as a middleman.
As insurance premiums are exempt from VAT, insurers are not allowed to claim a rebate on the sales tax, said the report. Hastings insists its operations in the UK should not be classified as an insurer and therefore should be allowed to recover VAT payments.
According to HMRC, Advantage has an “establishment” in the UK for VAT purposes. Hastings said it was “awaiting the outcome of the tribunal proceedings,” but declined to comment further, the report added.
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