INSURANCE PREMIUM TAX - DON'T LET IT UNDERMINE YOUR PROGRAMME
Insurance Premium Tax (IPT) can be the Achilles Heel of a global insurance programme, the AIRMIC annual conference heard today. Getting it right requires considerable effort, but protects the organisation and its risk manager from the consequences of non-compliance.
“If your programme breaks the IPT rules, no matter how innocently, it can result in fines and damage to your firm’s reputation and jeopardise any claims you make,” former AIRMIC chairman David Ketley told a workshop.
“This is one aspect of an insurance programme that’s easy to overlook, but you mustn’t ignore it.”
The basic rules are fairly straightforward, he said, but the devil can be in the detail. Insurance managers need to be clear about who is liable to pay IPT and which rules apply. The method of premium allocation can also be fraught, with companies tempted to be over-weight in countries where IPT is low.
“It can be important when making a claim or when questioned by the authorities to demonstrate that your IPT allocation reflects as accurately as possible the location of your risk,” he told delegates.
Co-presenter Mike Stalley of Fiscal Rep Limited set out a 5-ppint checklist for insurance buyers:
- Don’t let the tax tail wag the insurance dog;
- Justify the allocation of premiums;
- Calculate tax cost at renewal;
- Seek professional advice;
- Check whether your broker and/or insurer are paying IPT.
David Ketley is Insurance Manager at Cargill Europe.
The AIRMIC annual conference “communicating risk management” takes place at the Edinburgh Conference Centre June 17-18. The association represents nearly 1,000 risk managers and corporate insurance buyers, including approximately 75% of FTSE 100 companies.
For further information, contact Mark Baylis, Complete Communications, +44 (0) 7775 693994, mark.baylis@airmic.co.uk