The ABP Club is gathering details of repairers who are incensed by the tax advantages given to repair centres owned directly by insurance companies, such as the Solus group of Norwich Union and RBS’s UK Assistance. Individual ABP Club members are also writing to their MPs.
One northern England-based repairer says: “This whole issue stinks. The threat has not gone, with Norwich Union buying bodyshops and Direct Line and RSA owning shops. This is a major threat to fair trade.”
It follows a request by the Body Repair Industry Campaign (BRIC) to HM Revenue & Customs for it to review the situation. BRIC research director Shaun O’Reilly says insurance-owned centres obtain a 5-8% cost advantage allowed to businesses providing services in house over independent body repairers who pay VAT in full.
HM Revenue & Customs says this was last reviewed in 1999 and the case will not be re-opened. “Such a VAT advantage is a normal part of the VAT system,” says its policy advisor, Mohsin Talati. “The VAT effects of integration apply across all exempt industries.”
Robert Hadfield of ABP says the loophole presents an unfair position not only for bodyshops but also to smaller insurers who do not own their repair networks. “I do not blame insurers for exploiting this but I do blame this government and previous ones for allowing it to develop,” he adds. Hadfield says he does not oppose insurer-owner bodyshops, but they should operate under the same commercial constraints as others.