Insurance - Foreign insurers regulation
Government plans to impose retrospective regulations on foreign insurance firms would be overruled in the European court, according to European law experts, writes Andreina Cordani.
Legislation in clause 85 of the Finance Bill requires every foreign insurance company with policy holders in the UK to notify the Inland Revenue every time it makes a payment.
The measure, designed to keep better track of insurance windfalls gained by UK taxpayers, means companies with no UK office will be forced to appoint a UK representative to be held personally responsible for filing the certificates.
If the firm has no UK office, the government will designate a UK representative to be responsible for filing the certificates. European barrister Gerald Barling, QC, said the regulation would not withstand a challenge in the European court.
Anne Redston, an Ernst & Young tax partner, said: ‘The person appointed will be liable for someone else’s action.’ If the appointee fails to provide the information, they could face a fine of up to #3,000.
She added: ‘The law is retrospective, so companies will have to invest time and money complying with the law so that the Revenue can have “back-up” information on taxpayers.’