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Another kick in the teeth for motorists

Insurers and loss adjusters will end up paying 20% more for all police reports after a move by HMRC to get police authorities to start charging VAT on the reports and to backdate the tax by three years.

Until now no police authorities have charged the industry VAT for reports for car accidents, crime and theft, but an HMRC spokesman said this would now apply to all reports.

HMRC classes these reports as 'voluntary' and therefore subject to VAT.

Before VAT, the minimum charge for a single police report on crime and theft is £75, but many constabularies choose to charge more. 

There is no minimum fee for car accident reports, but these normally cost a minimum of £70 and can cost more than £200.

Allianz casualty and motor manager Sarah Mallaby warned that charging VAT on the reports would drive claims inflation and increase motor premiums.

Mallaby said: "Theft and accident reports are necessary to our claims operations and we therefore have no choice but to continue to purchase them. But, at a time when the industry is struggling to contain other claims costs such as referral fees and credit hire rates, this is another cost that can only be supported by motor premiums."

Thames Valley Police Authority started charging VAT last month, and is the first authority to do so after the HMRC changes.

HMRC told Thames Valley that they should have been charging VAT on the reports all along and could backdate VAT by three years.

However, a Thames Valley Police Authority spokesman said that the force had decided to pay the backdated VAT out of its own pocket to avoid extra work.

 

Richard Anthony Oakes, Sharon Linda Oakes & Ashley Burton trading as Oakes Insurance Consultants are
authorised and regulated by the Financial Services Authority. Number 307170

Registered office: Oakes House, Derby Road, Long Eaton, Nottingham NG10 1PD