Paying VAT on an accident claim (not our fault) when not vat registered - is this right?

[Wisteria]

Hi
A friend of mine was involved in a RTA - the claim is being processed and he has been asked to pay the vat.

He's a driving instructor but is self employed and not VAT registered.

The accident was not his fault and the claim is coming from the other side.

Should he have to pay this as he won't be able to claim it back?

TIA

Never heard of that. Perhaps as he's a business they think he is registered for VAT, in which case he would be able to claim it, presumably.

I think it's just the guilty party's insurance trying it on. Tell him to pass the details stright to his own insurers.

Thanks 40+ - that's what I told him but although I deal with VAT it's not within my remit of knowledge ...

I just wondered if there's some weird rule that I'm not aware of - if he was a Company registered for VAT it would be correct I know as insurance companies can't recover VAT but he's just self employed so it can't be correct can it??

BUMP!!

anyone else have any gems of wisdom for me??

No no, he should be paying the VAT, and no, he won't get it back.

That's how VAT works. Everyone pays it (businesses and individuals), only VAT-registered businesses claim it back (by collecting it on their services).

Hi NQC - thanks for responding.

Are you sure? It seems very unfair considering the accident is not his fault and he's not claiming from his own insurance policy - if it was his fault and so he would be paying excess anyway then that I would understand but he isn't..

I've had an accident where it wasn't my fault, therefore claiming from other side and I wasn't asked to pay any VAT..

What is the VAT on?

I might be missing something here. If he's paying X for the repairs, then he should be paying 17.5% of X as VAT. But if he's not paying for anything, he shouldn't be paying for the VAT on something, iyswim. (I am v tired.)

Presumably his insurance company will know the deal on this?

Sorry you're tired NQC and thanks for answering

He called me last night in a state about it but just said that the insurance company had asked him to pay the VAT on the accident repair, although not his fault.

I will check there's not a misunderstanding here (he's on a lesson at present) but he said he wasn't claiming from his own insurance and the other party had admitted full responsibility so I am presuming he's not paying anything - it sounds like the insurance companies have got it round their neck to me!

It does sound like they're maybe pulling a fast one. I mean, if the insurance co are paying for the accident repair, they should pay for the VAT on it too (and claim it, obviously).

Cheers - will do further investigation.....

I have to go make carrot cake.

But the thought is appreciated!

Definitely just tell him to inform the other company that he is passing it to his own insurance co to deal with. They will act on his behalf - he doesn't have to worry about it himself. His maximum loss would be the excess on his policy and even that would be covered if he's got extra legal protection that you pay a few extra ££ for.

He wouldn't be paying the excess if it's not his fault though, would he?

If he was paying the excess then he would qualify to pay the VAT as well but he didn't mention that....

If he's been asked to pay the VAT then he needs to forward it to his insurance company to sort out. He will pay the excess then reclaim it.