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NU brings Indian call staff in-house

Norwich Union is bringing its 1,000 Indian call-centre staff in-house in a move that will enable it to bypass a potential tax charge.

The move follows a European Court of Justice ruling that raises the likelihood that UK life offices will have to pay a 17.5 VAT charge, from which they were previously exempt, on non-sales outsourced services.

HM Customs & Excise is set to launch a consultation after this week’s general election.

NU announced the outsourcing of around 1,000 jobs in its back-office and servicing departments last September. It planned to raise this figure to 7,500 at a cost saving of 40 per cent compared with an equivalent UK operation.

Although the Indian call-centre staff will be NU employees, they will face a huge pay discrepancy compared with their UK counterparts.

UK chief executive Gary Withers says: “We have not fully explored the tax implications of this but it will motivate us to transfer the operation in-house as quick as is sensibly possible.”

ABI taxation manager Lee Francis says: “We are discussing this with HM Customs & Excise and they will consult on it after the election.”

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