Further to our previous blog of 26 August 2011, HMRC has now issued Revenue & Customs Brief 35/11 which offers further clarification on points of interest/concern regarding the VAT Tribunal decision in the case of Paymex Limited. Headline points are as follows:
- Although the Tribunal decision itself applied purely to consumer IVAs, HMRC consider that the terms of the Tribunal decision read across to all IVAs.
- The Tribunal decision does not deal with Company Voluntary Arrangements or Partnership Voluntary Arrangements – reclaims for VAT arising from roles as supervisors of such arrangements will be rejected.
- The effect of the Tribunal ruling is that IPs may have overpaid VAT, and therefore HMRC will pay claims for such overpaid VAT, subject to the normal partial exemption recovery position, where the IP’s services in an IVA are covered by the terms of the ruling. The VAT repaid will go into the IVA.
Sarah Franklin and Steve McIntyre are currently looking at claims and would be pleased to offer further advice should an Insolvency Practitioner be considering submitting a claim for a refund of VAT. They can be contacted on 01962 735350.
Hot of the press is news that in the case of Paymex Ltd v HMRC, the VAT Tribunal have held that nominees’ and supervisors’ fees in an Individual Voluntary Arrangement (IVA) to constitute a single exempt supply for the purposes of VAT under Article 135 (1) (d) of the Principle VAT Directive (2006/112/EC).
We understand that HMRC will not be appealing the Tribunal’s decision but that a Business Brief setting out their response to this decision will be issued shortly.
This will have an impact on any advisor involved in providing insolvency advice. We will keep you updated, but in the meantime, if you would like any further advice on this issue, then don’t hesitate to get in contact with John Crawford at firstname.lastname@example.org.