A UK company manufactures a product for a US subsidiary. Although the product is sold in the US, the UK parent takes out product liability protection to cover the liability of its subsidiary. The US subsidiary is considered to be the business establishment as a purchaser will potentially sue this company rather than the UK parent. The premium is therefore not subject to UK Insurance Premium Tax (IPT).
The position will be different though if there is no US subsidiary and the products are sold from the UK. The product liability cover can only protect the UK company, so the premium is subject to UK IPT.
