Meet the Expert: James Brown, Principal Compliance Services Representative

Meet the Expert is our series of blogs where we share more about the team behind our innovative software and managed services.

As a global organisation with indirect tax experts across all regions, our dedicated team are often the first to know about new regulatory changes and latest developments on tax regimes across the world, to support you in your tax compliance.

We spoke to James Brown, principal compliance services representative here at Sovos, to find out more about his role and why interpretation can be difficult in Insurance Premium Tax (IPT) compliance.

Can you tell me about your role and what it involves?

My role is as a principal compliance services representative. It’s quite a wide ranging role with a few different elements to it.

First and foremost, I act as a specialist on some of the more technical aspects of IPT compliance that we encounter. So if any queries arise from our main managed service function that are specifically about compliance, I’m usually the first person to take a look at those queries, and determine how best we should be dealing with them. Sometimes that can involve our consultancy department as well.

I am quite closely linked to our consultancy department and act as an intermediary of sorts between the IPT managed service department and the consultancy. When required, I assist in drafting reports on some of the more difficult technical points that arise from our clients. I research the legislation and any guidance that we have from tax authorities to produce a report for clients to answer their queries.

I’m also involved with any process changes that we have in certain countries. For example, in Finland recently, there was a process change to the authorisation that’s used by us to submit returns and to act on behalf of our clients. It’s now under a new regime known as the Suomi authorisation. I was involved in the transition to ensure we were maintaining compliance on behalf of our clients. There’s also upcoming mandatory online filing in Germany which I’ll be assisting with.

And finally, I also have close involvement with Italy. Italy tends to be one of the more challenging countries that our clients deal with. I lead our Italian team and make sure we are taking the action that’s required to resolve any client issues.

Why is interpretation difficult for IPT clients?

Interpretation is difficult from an IPT perspective because of the different legislation that we have in place at different levels across the EU in particular.

There’s EU set legislation, which forms the basis for the overall IPT landscape across the EU and sets certain rules, notably the Location of Risk rules that the Member States are required to implement into their domestic local legislation.

This is where things can get a little bit more difficult. When legislation is implemented by a Member State, they may not do so word for word and certain issues may arise at domestic level that mean that domestic courts get involved in interpreting how those rules should be applied on a domestic level.

Then there are the European-wide rules, and the interpretation from one Member State to another may not necessarily be 100% consistent, which means that IPT is not harmonised across the EU. In addition to this, the rules are always changing, so there can be different cases that different courts across different jurisdictions are ruling on. Introduction of new legislation can also cause changes at a domestic level.

This results in a lot of different legislation, which can be interpreted in different ways and this is ultimately what leads to quite a difficult picture with interpreting IPT compliance across the EU.

There is also the difficulty of legislation being drafted in the local language of the relevant country, which requires language knowledge to interpret the legislation correctly. At Sovos we have a real advantage as our IPT department speaks a number of different languages. We also have a network of local associates that help us with any particular issues we have in relation to certain countries.

Do you have any tips for insurers to make interpretation in IPT compliance easier?

First and foremost, it’s important to be clear on the insurance that’s being written and which classes of business the insurance relates to. This means that when there are changes introduced in different EU Member States, insurers will be able to understand how it may affect the business they’re writing.

Sovos’ consultancy department can review policy documentation to ensure the insurer is correct in their understanding of what insurance class is being written and therefore what tax rates should apply.

Ensuring members of any insurance accounting and taxation departments have a very good base level of IPT specific knowledge. Many insurers have a fairly broad taxation knowledge. But IPT is so specific and so niche. And in some cases, the IPT legislation can be so old and so specific that there isn’t as much IPT focused knowledge as there may be for other taxes. If you don’t have the in-house knowledge, a managed service provider can help ensure IPT compliance.

How does Sovos help insurers with IPT interpretation?

Sovos helps with not only managing the filings themselves and tax authorities, but also any specific points and technical issues that arise. Sovos liaises with the tax authorities on our clients’ behalf. We have good relationships with a number of different tax authorities through our contact with them on a regular basis, whether that’s through our associates or directly ourselves.

And then there is our consultancy department which is available to any insurers looking for advice, regardless of whether they use other Sovos services. The consultancy team is extremely experienced in reviewing local legislation and guidance and liaising with authorities and local advisors where necessary.

I’d encourage insurers to make sure that they’re signed up to our tax alert emails which are a great resource for straightforward, digestible information to help begin the process of understanding how upcoming changes affect the insurance they write or the tax they declare. We also run regular webinars on a number of technical IPT points, which are a good starting point for any taxation departments looking to start building on the knowledge that they hold in-house.