Example of establishment: contingency

Example one - a concert
A UK company promotes a concert which is held in Hong Kong with a US Band. It uses a local agent to handle the administration and to sell tickets. The UK company takes out a policy to cover its loss of profits and expenses if the concert is cancelled. The local agent is not covered by the policy. He will be paid for his work whether the concert is held or not and he will therefore not suffer a financial loss through cancellation.  The Hong Kong agent does not constitute an establishment to which a clearly defined risk is attached. The whole of the premium is therefore attributable to the UK entity and is subject to UK Insurance Premium Tax (IPT).

Example two - a conference
A UK company arranges a conference in Paris for senior management.  It takes out insurance to cover any expenses it may incur if the conference is cancelled.    

Although a claim under the policy may be triggered by either an event in Paris, eg, the hotel bums down, or in the UK, eg, the major speakers are prevented by illness from attending, the risk does not attach to any form of establishment in Paris. There is only the UK establishment and the whole of the premium is therefore subject to UK IPT.
Last updated on 16 Jul 2007