Based on HM Revenue & Customs guidance
Because of the confidential nature of this business a company may not be aware that its employees are covered by a kidnap and ransom policy. This can happen, for example, where a parent company takes out a policy which covers employees working for its subsidiary companies as well as the parent company and pays the whole of the premium. If the parent or any of the subsidiary companies whose employees are covered by the policy are in the UK, the premium must be apportioned and Insurance Premium Tax (IPT) is due on the proportion which covers the business establishments in the UK.
The apportionment must be made on a just and reasonable basis. So if, for example, a UK parent company with French and German subsidiaries takes out a kidnap and ransom policy and the employees of all three companies are covered, the premium must be apportioned. IPT is due on the proportion of the premium covering UK parent company and the proportions covering the subsidiary companies are subject to French and German premium taxes respectively. This applies even if the French and German subsidiary companies are not aware that a policy has been taken out and the UK parent pays the premium. Underwriters are reminded that they may be required to substantiate the liability and/or apportionment of a premium to HM Revenue & Customs.
