Budget Notes


Who is likely to be affected?

1. Overseas insurers with no business establishment in the UK who write taxable risks located in the UK, and their UK customers.

General description of the measure

2. This measure will remove the compulsory requirement for overseas insurers to appoint a tax representative and additionally, will restrict the ability of HM Revenue & Customs (HMRC) to assess the insured party for tax due from an overseas insurer to circumstances where the insurer is located outside of the EU and not covered by the Mutual Assistance Directives or any such similar arrangements on exchange of information and recovery of tax due.

3. Overseas insurers writing taxable risks located in the UK will still need to register for insurance premium tax (IPT), but will be able to choose whether or not to appoint an agent to act for them in the UK. This agent will not be jointly and severally liable for the tax due by the insurer.

Operative date

4. The changes will have effect on and after the date that Finance Bill 2008 receives Royal Assent.

Current law and proposed revisions

5. Sections 57 and 58 of the Finance Act (FA) 1994 requires an overseas insurer who is liable to be registered for IPT, but who has no business or other fixed establishment in the UK, to appoint a tax representative. That tax representative is jointly and severally liable for the discharge of the insurer's obligations and liabilities in the event of failure to comply by the insurer. Also, section 65 sets out that where an overseas insurer does not have any business or other fixed establishment in the UK, and does not have a tax representative, then the insured party may be assessed for the tax due from the insurer.

6. Legislation will be included in Finance Bill 2008 to delete sections 57 and 58 of FA 1994. It will no longer be compulsory for an overseas insurer to appoint a tax representative. Any representative will no longer have the requirement to be jointly and severally liable. The legislation will also amend section 65 of FA 1994 so that the insured party cannot be assessed for tax due from their insurer unless the insurer is located in a country outside the EU and not covered by mutual assistance, or similar, provisions.

7. A consultation document published in July 2007, summary of responses to the consultation, and the Impact Assessment are available on the HMRC website. Public Notice IPT1 will be updated to reflect the changes to the tax representative requirements and the changes to the liability of the insured. The guidance in V2-01 will also be updated to reflect the changes.

Further advice

8. If you have any questions about this change, please contact the National Advice Service on 0845 010 9000. Information about Budget measures is available on the HM Revenue & Customs website at www.hmrc.gov.uk