Services provided by insolvency practitioners

HM Revenue and Customs (HMRC) has issued a further brief following the First Tier Tribunal decision in Paymex Ltd (Case ref (2011) UKFTT 350). HMRC first commented in Revenue & Customs Brief 27/11.

Revenue & Customs Brief 35/11 has been issued to provide further clarification in particular to the insolvency profession.

The case concerned certain services provided by insolvency practitioners and the applicable rate of VAT. Paymex Ltd was part of a group containing a member, Blair Endersby, that provides licensed insolvency practitioners (IPs) to run and maintain Individual Voluntary Arrangements (IVAs). IPs provided two services:

  • nominee services (involving the preparation of the proposal between a debtor and creditors)
  • supervisory services (involving supervising and monitoring any agreement in addition to taking regular payments from the debtor in order to pay creditors).


HMRC wishes to highlight that although the decision applied to the consumer of IVAs, the decision should be applied to all IVAs. The decision should therefore not only apply to specific types of IVA decided upon in this case, it should apply to the types of services similar in nature to those decided upon in this case.

HMRC has stated that it does not believe that this ruling can be applied to Company Voluntary Arrangements (CVAs) or Partnership Voluntary Arrangements (PVAs) and any claims for overpaid VAT for these will be rejected.

As detailed in the previous brief, HMRC is encouraging claims for overpaid under Section 80 of the VAT Act 1994. For details on how to make a claim, please view VAT Notice 700/45: How to correct VAT errors and make adjustments or claims.

When making a claim, please be mindful of the four year cap when making a claim and unjust enrichment.