London, November 18, 2015 – Speaking yesterday at the FiscalReps Indirect Tax Academy, Mike Stalley, FCA, Founder and Chief Executive of FiscalReps, set out the potential costs of an Insurance Premium Tax (IPT) error.
Based on a typical IPT rate across Europe of 15%, and an average Combined Operating Ratio (COR) of 95% across the majority of the UK insurance market, a 5% IPT error could reduce underwriting profit by 15%.
Stalley said: “The impact of an IPT error could cause a significant drop in underwriting profits. These costs would be in addition to the non financial costs that a company could suffer, including the effect on its reputation, statutory audit concerns and internal morale. Management time costs involved in rectifying the error also need to be considered, as well as the eligibility of some policies if taxes and levies remain unpaid.”
The Academy, now in its 10th year, ran a number of breakout sessions including the expanding scope of IPT, Location of Risk rulings, VAT on claims costs and a detailed breakdown of the very recent increase in the UK IPT rate. While the UK IPT rate still remains one of the lowest in Europe, rates across all of Europe are continuing to increase, as governments shift their focus from direct to indirect taxation.
Attending the Academy, Ronald Hogan, from Greenval Insurance, said: “Insurance Premium Tax and its knock on effects are always changing, which is why the regular updates from FiscalReps and information from days like this are so important for our business. The events are also a great networking opportunity and a chance to meet with the FiscalReps team who we have been dealing with throughout the year.”
Stalley concluded: “There is a growing demand from clients for detailed knowledge of IPT in international markets. Businesses want to make sure that they are paying the right amounts to the right authorities so that all indirect costs and charges can be fully accounted for. This is a constantly evolving area that requires a detailed understanding to ensure that all compliance processes on a local, national and international level are effective. We would like to thank all the attendees, and speakers, at the Academy and look forward to our continued work together throughout the year.”
) helps insurance businesses to comply with insurance premium tax (IPT), VAT and parafiscal taxes internationally.