Personal insolvency procedure VAT-exempt, says court
Individual voluntary arrangements are exempt from VAT a judge has ruled
HM REVENUE & CUSTOMS has lost a landmark case over VAT charges on personal insolvency procedures.
The latest ruling means that insolvency practitioners can offer the insolvency service without charging VAT while also gaining the chance to recoup backdated payments.
Insolvency company Paymex has been battling with the Taxman to clarify whether or not individual voluntary arrangements (IVAs) should be VAT exempt, Manchester Professionals reports.
An IVA entails an insolvency practitioner consolidating and reducing a person’s debt and arranging repayments over a contracted period of time.
The judge ruled that insolvency practitioner services in arranging an IVA are exempt from the tax under European legislation.