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
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 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 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
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.
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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