Insurance claim paid without vat - how is this accounted for?

Following an insurance claim when a lorry hit our building NFU have paid the claim without VAT
They correctly say we can reclaim as a VAT registered business.
However I am not sure of the correct way to deal with this on QuickFile.
Do I open up a new NFU supplier and then make the sale as 0% vat?
This will make my VAT return add up but is it correct?

Hi @Richardo

With NFU handling this, have they reimbursed you for the expenses that the claim covers (e.g. repairs), or have they paid the supplier directly, and you need to pay for the VAT element?

Hi, Thank you for your reply.
They have paid me a sum to do the repairs without vat as they say I can reclaim that.
I will get the work done as soon as lockdown is over and I can reclaim the vat from my builders vat invoices. I am just a little unsure how to do the vat bookkeeping. I was thinking of opening a new customer NFU insurance and entering a sale with no vat. I could then receive that money so it was in the system and in the vat return. The builders invoices would be entered in the usual way.
I can see that my vat return this quarter would be correct as far as vat is concerned, but not at all sure if this is the correct way to do this. It feels like I am reclaiming vat that I am not entitled to but I don’t think I am really! All help gratefully received! Richard

The best way to deal with the insurance payout is to tag the receipt directly from the bank account to an account created in the profit and loss account named, say, “Insurance claim on building damage” rather than raise a sales invoice.

This account should be next to where the account that the actual building repairs will be posted - presumably account 7800 “Repairs and renewals”.

You could make the account number 7799, for example.

Doing it that way keeps the insurance claim completely away from the VAT return as insurance claims are not entered on the VAT return at all as they are out of the scope of VAT.

See 3.7 Filling in box 6 in HMRC’s guide at:

Thank you so much for your help. Much appreciated!

I would set up the nominal code for the insurance claim under miscellaneous income, rather than as an expense code.

This topic was automatically closed after 7 days. New replies are no longer allowed.