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HM Revenue and Customs Brief 27/11


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Issued 19 July 2011 - HMRC

HMRC Position following the Tribunal Decision in Paymex Ltd

This brief explains the HM Revenue & Customs (HMRC) position following the First Tier Tribunal decision in Paymex Ltd (Case ref (2011) UKFTT 350).

The Tribunal found against HMRC and upheld the appeal of Paymex Ltd that the liability of the services of Insolvency Practitioners when conducting and supervising consumer Individual Voluntary Arrangements are exempt from VAT. HMRC are not appealing this decision.


Paymex Ltd is the representative member of a VAT group which includes Blair Endersby. Blair Endersby provides Insolvency Practitioners (IPs) to run and maintain Individual Voluntary Arrangements (IVAs). An IVA is made and conducted in the context of a statutory framework and can only be conducted by a licensed IP. It enables an insolvent individual to make a proposal for an IVA with their creditors. The IP carries out two services; nominee services which involve the preparation of the proposal to be agreed between the debtor and their creditors, and supervisory services involving the supervision and monitoring of the agreement, including taking regular payments from the debtor and paying the creditors in accordance with the agreement.

Tribunal decision

The Tribunal decided that the services of an IP, including both the nominee and supervisory stages, constitute a single exempt supply for VAT purposes. The Tribunal went on to decide that the two core elements were negotiation of debts and transactions concerning payments. Since it had found both core elements to be exempt, it was not necessary for the Tribunal to determine which of the supplies were dominant. However it stated that if it had been necessary for it to do so it would have found negotiation to be the ‘core’ supply.

HMRC position

HMRC will not be appealing this decision and subject to the normal rules on input tax adjustment, capping and unjust enrichment, HMRC will pay claims for overpaid tax charged on the services of Insolvency Practitioners that fall within the findings of this Tribunal decision.

Further information

Details of how to make any adjustments relating to previous VAT Return periods can be found in VAT Notice 700/45 How to correct VAT errors and make adjustments or claims and from the VAT Helpline on Tel 0845 010 9000.

Where you are in any doubt about the correct VAT treatment please contact the VAT Helpline on Tel 0845 010 9000.

About the Author

© Crown Copyright 2011.

A licence is needed to reproduce this article and has been republished for educational / informational purposes only. Article reproduced by permission of HM Revenue & Customs.

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Article Published/Sorted/Amended on Scopulus 2011-07-20 12:41:37 in Tax Articles

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