Latest news

VAT exemption for Trust Deeds & IVAs

After a 'landmark court ruling', Protected Trust Deeds, like IVAs, have been declared to be exempt from VAT, credittoday.co.uk reports.

After a judge ruled that IVAs were exempted from VAT, the Institute of Chartered Accountants in Scotland (ICAS) 'sought clarity' on whether or not VAT should apply to Trust Deeds.

The Insolvency Practitioners Association (IPA) has provided some guidance on the 'practical implications of the Paymex decision' (Paymex Limited v. The Commissioners for Her Majesty's Revenue and Customs [2011]).

That decision, the IPA explains, meant that Nominees' and Supervisors' fees in a normal consumer IVA were 'exempt supplies'. Later on, HMRC decided that those fees should be exempt in every kind of Individual Voluntary Arrangements, Partnership Voluntary Arrangements and Company Voluntary Arrangements (IVAs, PVAs and CVAs).

The IPA goes on to explain that 'Separate advice sought by ICAS concludes that Trust Deeds are caught by this decision and HMRC has confirmed to the RPBs [Recognised Professional Bodies] that they are exempt'.

It tells IPs that they should make sure their firms immediately stop charging VAT on any invoice for fees and disbursements in IVAs, PVAs and CVAs.

Protected Trust Deeds are only available to struggling borrowers who live in Scotland; people who live in England, Northern Ireland or Wales may be able to enter an IVA to help them deal with unsecured debts they can't afford.