Reclaiming VAT on legal services in connection with insurance claims

Policyholders, who are registered for VAT, can reclaim ‘VAT incurred on legal services supplied to them in connection with an insurance claim relating to their business’. This applies whether the solicitor is instructed by the policyholder or by the insurer on his behalf. This practice also applies whether or not the proceedings are controlled by the insurer. The supply is normally treated as made to the policyholder, not to the insurer, even if the insurer exercises his right of subrogation to pursue or defend a claim in the name of the policyholder.

Example: Insurance recovery excludes reclaimable VAT

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