I recently had to invoice an insurance company for some repairs to one of my vehicles. When they paid the invoice they did not pay the VAT only the sub total. When I asked them why they told me that insurance companies do not have to pay the VAT even though they are VAT registered. I checked with the VAT office and they confirmed this, however they said that I still have to pay them the VAT amount shown on the invoice and then claim it back. How can this be?, surely it is the law that if you are VAT registered then you MUST pay it unless it is a VAT exempt item! . I have been told by a friend with a bodyshop that this is the case and it causes complications especially with the costing of parts Etc:. Can anybody advise me as to how I go about paying and then claiming back this VAT and also explain why insurance companies are allowed to buck the system and yet huge multiconglomerate international companies with billion dollar turnovers are not allowed to.