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FIVE THINGS YOU’RE DOING THAT ARE INVALIDATING YOUR CAR INSURANCE

CAR INSURANCE

Car insurance is a legal requirement for motorists, but many drivers may be unknowingly voiding their policy.

Failing to update your circumstances or providing false information, whether intentionally or not, could lead to your insurer refusing to pay out or cancelling your policy. In the worst-case scenario, you may be liable to be prosecuted for fraud.

To help motorists avoid any issues with insurance, experts at online car parts provider CarParts4Less have outlined five common mistakes that can invalidate your policy.

  1. Car modifications

Nearly half (47%) of Brits have modified their car in some way, with over a third (37%) spending £500 or more souping up their motors*, but failing to notify your insurer about any changes to your vehicle could void your policy.

There are two ways that car modifications can affect your insurance premium: if they increase the likelihood of an accident (performance upgrades), or if they increase the likelihood of theft (cosmetic upgrades or tech add-ons, such as a soundsystem).

Always ensure that you inform your provider about any changes to the vehicle, as this will allow your insurer to assess the validity of your policy.

  1. ‘Fronting’ 

Insurance for young drivers often costs more than groups deemed less of a risk. One way some motorists try and get around the higher premiums is by having a low-risk driver, such as a parent or partner, named as the main policyholder and adding the real motorist as a named driver.

However, if you get caught ‘fronting’, as this tactic is known, your policy will immediately be cancelled, and any claims denied. These cases are often taken to court and are classed as insurance fraud, with outcomes including fines of up to £5,000 and six points on your license.

  1. Not updating your address

Car insurance premiums can vary depending on the postcode, as some areas have higher rates of thefts and break-ins. It can be tempting to put down your home address as somewhere different to where your car stays every night; for example, your parents’ house while you are at university. However, if you do so, your insurer can refuse to pay out for any claims made at your actual main living location.

Many companies have investigative departments (called a special investigations unit, or SUI) dedicated to making sure information on your insurance and claims is correct, so while you may think you can get away with not updating your address, you’ll likely be caught when you make a claim.

  1. Not reporting accidents

Many motorists don’t see the point of notifying their insurers about small bumps and scrapes. However, even if you don’t intend to claim, it is important to inform your insurance provider about any damage, as not doing so is a breach of your policy.

This protects you in the event that the other driver changes their mind and decides to claim. It also ensures damage is accounted for if you do need to claim for future incidents, as damage which is inconsistent with a claim may mean that you are denied.

  1. Commuting

There are three types of car usage that insurance covers: social only, social and commuting, and business

These different policies provide different extents of coverage, and using your car outside of this usage will mean that you’re unable to claim. For example, social usage does not cover your car when commuting, so you will be unable to claim for any incidents while travelling to or from work.

A CarParts4Less spokesperson said: “While it may be tempting to bend the rules to pay for a cheaper policy, it’s never worth it, and will often lead to you paying substantially more in the long run.

“It’s important to always read the terms and conditions of your car insurance policy, to ensure that you have not accidentally invalidated the policy. Keep your insurance provider up to date with any change of circumstances, regardless of whether or not you think it’s relevant. It’s better to be safe than sorry.”

To find out how to legally reduce your car insurance costs, visit https://www.carparts4less.co.uk/blog/10-tips-to-reduce-your-car-insurance-premium

Wealth Management

SECURING THE EVIDENCE FOR VAT AND TAX

Filippa Jörnstedt, Senior Regulatory Counsel at Sovos

 

Businesses are almost entirely digital in their nature. With sophisticated technology now in the reach of most, the measurement and reporting of business transactions have transitioned from slow, manual processes to being automated, allowing finance teams room to breathe. However, alongside the positives of these advancements, there also comes a responsibility to understand the wide-ranging requirements of governments worldwide when it comes to financial transparency.

Recently, we’ve witnessed a shift towards more continuous transactional controls and reporting schemes carried out in real-time, as governments look to reduce their VAT gaps and discrepancies in their economies. Historically, the pressure was on businesses to report their own transaction data, but with the new formats being used, governments are beginning to take matters into their own hands. This makes logical sense, as there is far more complex real-time data being submitted by businesses that governments have access to.

Filippa Jörnstedt

The figurative stick that is VAT control reform is often introduced together with a carrot: removing the need to collate and submit periodic reports, such as VAT returns, to the tax authorities. Ideally, this means less pressure on businesses.  That is, until a problem surfaces, such as data being interpreted in the wrong way, or a dispute arising about the timing of a transaction. Often, these problems originate from reporting being mishandled or through the clearance of transaction data, so keeping a rigorously organised and in-depth record of financial information is imperative for businesses to avoid these problems. Aside from this, it allows them to substantiate any government reports and fix any issues. The difficult aspect, though, is how to build these archives in this way.

 

Digital paper trails

In previous iterations, financial employees were responsible for collating and archiving paper invoices, receipts and other data to provide evidence of their business activity. So, the process of archiving isn’t new, but it needs to reflect the digital times we find ourselves operating in. Simply put, this isn’t a manual task anymore, but many businesses have seemingly just moved to e-archiving without too much thought to just how crucial it is to get right. Modern tax authorities are asking for specific details behind each transaction, paying particularly close attention to time and date, so the archive cannot simply be moved to a digital filing drawer.

Looking at a recent example, India’s reporting requirements now involve invoice data to be sent to the authorities in real-time, for pre-approval and registration onto a state-operated platform.  The invoice will only be considered valid following the generation of a unique Invoice Reference Number by the same platform.

Looking at this from an audit perspective, if a business is later questioned on a transaction then they need to be able to quickly find the correct evidence of that particular transaction, as well as any government response message in relation to that transaction, or risk major fines. Alongside India, also countries closer to home such as Poland and Finland are shifting the way they operate with invoicing and reporting, following Italy’s successful system change last year.

And this is a clear trend; audits into business activity are only going to become more precise and closer to real-time as further governments see the benefits of adopting these methods of tax control. Real-time reporting and mandatory e-invoicing makes sense more widely as these systems have proven to be very effective at reducing VAT gaps, with evidence of this going back decades in areas of Latin America.

 

An authority shift

As outlined, with further countries adopting real-time reporting or variations of this, the tax authority is becoming more central to processes as they receive and gather details on VAT owed by businesses. Reporting in this way makes sense, but pressure on finance teams to keep incredibly detailed data-trails is more important than ever. Tax authorities are increasingly building rich data records of their own as they are receiving more and more granular data in real-time. As a result, the source-of-truth no longer primarily lies with the taxpayer’s financial records, but instead with the tax authority’s ledgers.

To keep pace with this, businesses can no longer simply file away invoices digitally, but also need to record as much data as possible to corroborate the authorities’ records of their transactions. By doing so, they are building an evidence base to be able to dispute any queries or wrong decisions to safeguard their activity. Keeping this front of mind will make the process of addressing any problems far easier than relying on old, less-detailed archives.

Throughout the EU, there are many variations in archiving laws that need to be adhered to. German requirements are set out in their GoBD principles, but in Italy the regulations are far more technical and detailed, reflecting their tax setup. This Italian model asks businesses to provide a documented description of their archives, an overview of its process, but also a delegation plan to show assigned responsibility for those processes. This isn’t an easy set of requirements, especially with laws frequently changing.

The whole aspect of archiving has long been important, but now the stakes are higher; it’s not simply a box-ticking exercise. A complacent, old-school approach to both invoice and transaction data archiving could now result in severe repercussions for businesses. A robust digital strategy is vital.

 

Managing archives to reflect the new normal

Digitalisation does have the benefit of taking some of the pressure off businesses, but this switch in data authority from the business to the tax authority doesn’t mean less work. Regardless of where information is stored, e-invoices must be now kept centrally and be available at any time for those that may need them. Storing these individually, including specific supporting transaction data will mean faster access to relevant evidence for any issues that may arise. Fortunately, technology is now available to do much of the heavy lifting.

To keep up with continually shifting regulation and, importantly, keep compliant with it, businesses must examine how they manage their transaction data and how to ensure their VAT evidence locker is fully stocked. Because legislation may change, but compliance is always compulsory.

 

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Wealth Management

HOW WILL COVID-19 IMPACT ESG INVESTING LONG-TERM?

By Kerstin Engler, Senior Wealth Manager, Geneva Management Group. 

 

Sustainability is a trend on the rise in every sector of the business world. From consumers to corporates, there has been a global shift bringing environmental and social consciousness to the fore.

The investment world is no exception. In recent years, there has been a rise in investors looking to the future ‒ opting to choose their investments on the basis of social and environmental impact rather than exclusively financial gain.

This is not just about making money back on an investment, but about making a bigger impact on the planet and building communities by investing in businesses that implement measures to ensure ethical practice, sustainability and accountability.

Statistics indicate that investors continue to put their money into businesses with a strong focus on environmental, social, and governance investing (ESG), even at the start of the year as the Covid-19 pandemic was already unfolding.

According to investment research company Morningstar, investors around the world put a total of $45.6 billion into funds focused on ESG in the first quarter of 2020. This is not to say that this sector was immune to global investment outflows experienced in response to the outbreak of Covid-19.

After reaching an all-time high of $960 billion at the end of 2019, following three years of consistent growth, sustainable funds declined by 12% in the first quarter. Comparatively, investment funds overall declined by 18%.

But what does the future hold for this investment sector beyond Covid-19? The reality is that it is simply too soon to tell. We have no evidence so far that companies which apply ESG criteria will weather this storm better.

In fact, it’s too early to know what the overall impact on investing will look like long-term beyond Covid-19. Globally, we are still collectively figuring out the ‘new normal’ during this unprecedented crisis.

We have seen that investors are typically focusing on the short-term, dealing with their current investments and focusing on the survival of their companies or their bankable assets.

Our clients want to know how the pandemic will change the world from an investment perspective. We have discussions with clients about how the corporate landscape, and therefore investment opportunities, will be affected. There is a lot of consideration of the impact on sectors including biotech, robotics, gaming and the automotive industry. Consider, for example, that the latter will be affected by a significant reduction in the use of public transportation.

People aren’t asking about ESG. There hasn’t yet been time to look to the long-term. During this period of uncertainty, there have been ripples of talk around the world about how nature will ‘take back cities’ and conspiracy theories that ‘planet Earth is teaching us a lesson’.

Perhaps one good thing that will come out of this is that we will emerge with more consciousness and more purpose. The world will certainly be less global and more local after the crisis. Covid-19 has shown the limitations of globalisation, disruption in supply chains, and transportation, for example.

One of the potential advantages for companies that are already ESG classified is that they may already produce locally for environmental reasons, which could give an edge in this new world where we realise the fragility of global imports and the importance of supporting local business. Other companies may still need to adapt their supply chain.

We have already seen businesses launching new initiatives to help those in need during this time. Beyond Covid-19, it stands to reason that there will be heightened social awareness. More than ever, people are thinking about social factors and uplifting communities. Sustainability could well be in focus as the world collectively heals and looks to the long-term for the planet and its people.

 

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