A recent Tribunal ase could have significant repurcussions for insolvency practitioners implementing IVAs. In the case of Paymex Limited the FTT held that fees charged in connection with an individual voluntary arrangement (IVA) are exempt from VAT. It concluded that both the nominee and supervisory components of the IVA process constitute a single supply, made up of exempt services of negotiation debts and payment arrangements (not taxable debt collection). It is thought that HMRC may appeal the decision. Whilst exemption is good news for the client it could result in the IP being able to recover less VAT on their costs. In the meantime insolvency practitioners should review their fee structures and partial exemption position in the light of this decision.
Owner: Longboat VAT Advisers LLP
Contact: barry.stocks@longboat-vat.com
