Definition of insurance

HMRC has published a new definition of what insurance means for VAT.The Court of Justice of the European Union upheld the definition which concluded that:“…the essentials of an insurance transaction are… that the insurer undertakes, in return for prior payment of a premium, to provide the insured, in the event of materialisation of the risk covered, with the service agreed when the contract was concluded”.HMRC also accept that certain funeral plan contracts are insurance, even though they are not regulated as such under the FSMA insurance regulatory provisions.Vehicle breakdown insurance is also seen as insurance even though providers are given a specific exclusion under the FSMA from the requirement to be authorised.

Source: marcusward.co

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