VAT Opportunity for PPI Claims Handling businesses
Many PPI claims handling businesses assume that the fact that they are receiving a payment for handling a claim means that they are liable to pay part of their commission income to HMRC. This means that most PPI Claims Handling businesses lose 20% of their commission as VAT due to HMRC.
In fact both UK VAT legislation and case law indicates that such income may not subject to VAT, dependant on the activities that the PPI claims handling company undertakes. This opportunity can also extend to businesses that supply services to other entities that are part of the process of evaluating a PPI claim.
What is the Opportunity
Based on our findings for the clients that we have already advised there are two possible opportunities:
1) Securing VAT free status on the PPI Claims handling company’s income going forward
2) Making a claim for overpaid VAT for the past
As always with VAT, the ability to benefit from this opportunity will depend on the details of the activities that the PPI claims business undertakes, its agreement with its clients and other factors. It is therefore vital to take professional VAT advice on this issue.
What Should I Do to Ensure that I can benefit from the Opportunity?
If you are a PPI claims handling business, if you supply services to PPI claims handling businesses or if you are their accountant or tax adviser it would be well worth contacting us on our free VAT helpline to establish if an opportunity exists for you or your client. Please call our free VAT helpline on 0870 420 8971 for a free no obligation initial discussion.