A UK contractor takes out a contractor's all risk policy to cover the construction of a new road in Thailand.
The construction site is deemed to be an establishment for Insurance Premium Tax (IPT) purposes as the contractor has human and technical resources present on the site and the construction is long term, ie, greater than 12 months. The risks covered by the policy attach to a non-UK establishment and the whole premium is exempt from IPT.
However, insurance cover for maintenance and extended warranty that may continue after construction is complete will be taxable as there will no longer be a non-UK establishment for the risk to attach to.
