Cash in lieu with no VAT?

[ashkl]

So my insurer has decided to pay for the damages in a 'cash in lieu' basis since im getting it fixed at a garage of my choice. The assessor has been out and estimated the damage at around £2500. However i just got an email telling me they will only pay out £2500 minus VAT and minus my excess(£750) which leaves me with around £1400 to pay for damages. If im proven not to be at fault, my excess will be refunded to me, but i don't understand why they are excluding VAT. In the email it did say :

"You can claim back up to £XXX.XX of the VAT element once supplied us with a repair invoice receipt."

Does that mean if i get a receipt from my garage and send it to the insurer they will give the VAT amount back? Don't i have to be a registered business to claim back VAT as well since im only student. This is my first accident so im kinda confused on the whole process.

[James P]

I think that usually once you confirm that you're not vat registered, they will pay the full amount.

[Jujuuk68]

You accepted a cash payment in lieu of repair.

You're not paying VAT to anyone. If you're not paying it, you didn't lose it. If you didn't lose it, you don't get it back.

If you had asked for the repairs to be authorised at a repairer of your choice, the invoice raised would porbably include VAT and be met in full by the insurer. You're not being cheated in anyway, you're simply not being paid for something you have chosen not to pay.

[Wish]

Completely standard practise in the insurance world.

VAT is only generated once invoiced. Currenty as repairs have not been carried out no invoice has been produced. No vat has yet been paid.

[Ledaig]

Leaving the issue of the excess out of the equation, they are saying that the cost of the repairs will be £2,083 excluding vat.

If you do the repairs yourself this is what it will cost, and that is what they are offering.

If you have the repairs completed by a vat registered garage, this will add 20% bringing the total to £2,500.

They are saying that f you have the repair completed at a vat registered garage and then supply them the invoice including vat, they will the pay you the additional £417 vat cost.

[ashkl]

What will happen if my garage has said it will cost less to do the repair including VAT. For example my insurance company give me £2083 to pay for the repairs and the repairs cost £1800 including VAT. Will i still be able to claim the VAT in this scenario?

[Ledaig]

Just go buy a beer on the change (and give the mechanics a tip )

ETA - you've already had your total costs covered so nothing more to claim.

[TooMany2cvs]

ashkl said:

So my insurer has decided to pay for the damages in a 'cash in lieu' basis since im getting it fixed at a garage of my choice. The assessor has been out and estimated the damage at around £2500. However i just got an email telling me they will only pay out £2500 minus VAT and minus my excess(£750) which leaves me with around £1400 to pay for damages. If im proven not to be at fault, my excess will be refunded to me, but i don't understand why they are excluding VAT. In the email it did say :

"You can claim back up to £XXX.XX of the VAT element once supplied us with a repair invoice receipt."

Does that mean if i get a receipt from my garage and send it to the insurer they will give the VAT amount back? Don't i have to be a registered business to claim back VAT as well since im only student. This is my first accident so im kinda confused on the whole process.

If they pay a repairer directly, the invoice is £2500 + VAT, so they actually hand over £3,000, but then they claim the VAT back - it finishes up costing them £2,500.
If they pay you "£2,500+VAT", it costs them £3,000, and they can't reclaim a penny.
If you give them a VAT invoice, they pay you the VAT, then reclaim it.

[Ledaig]

To clarify, does the statement from the insurer state:

1) £2,500 minus vat (as you posted)
or
2) £2,500 less vat

?

[ashkl]

Its £2500 minus the VAT so £2083

[Ledaig]

Thanks for the confirmation, then I stand by my comments over 2CV's which imply the latter.

[ashkl]

Awesome, thanks for the help!!

[robdcfc]

TooMany2cvs said:

ashkl said:

So my insurer has decided to pay for the damages in a 'cash in lieu' basis since im getting it fixed at a garage of my choice. The assessor has been out and estimated the damage at around £2500. However i just got an email telling me they will only pay out £2500 minus VAT and minus my excess(£750) which leaves me with around £1400 to pay for damages. If im proven not to be at fault, my excess will be refunded to me, but i don't understand why they are excluding VAT. In the email it did say :

"You can claim back up to £XXX.XX of the VAT element once supplied us with a repair invoice receipt."

Does that mean if i get a receipt from my garage and send it to the insurer they will give the VAT amount back? Don't i have to be a registered business to claim back VAT as well since im only student. This is my first accident so im kinda confused on the whole process.

If they pay a repairer directly, the invoice is £2500 + VAT, so they actually hand over £3,000, but then they claim the VAT back - it finishes up costing them £2,500.
If they pay you "£2,500+VAT", it costs them £3,000, and they can't reclaim a penny.
If you give them a VAT invoice, they pay you the VAT, then reclaim it.

Not technically correct, the insurance company CANNOT reclaim the vat.

[chml]

ashkl said:

What will happen if my garage has said it will cost less to do the repair including VAT. For example my insurance company give me £2083 to pay for the repairs and the repairs cost £1800 including VAT. Will i still be able to claim the VAT in this scenario?

No... you will have had £2083 which is more than the GROSS amount so there is no further loss/cost to you.

[CanAm]

robdcfc said:

Not technically correct, the insurance company CANNOT reclaim the vat.

+1

[CanAm]

robdcfc said:

Not technically correct, the insurance company CANNOT reclaim the vat.

+1

[imagineifyeswill]

As said above the insurance company cannot claim the VAT back, you dont pay Vat on insurance hence their not VAT registered.t