VAT on Fees

[Syd Snitkin]

Does anyone know whether anyone is still advising that bailiffs can charge VAT on their fees? Seems to me that those who have been have been misleading debtors. For shame.

[zeke]

The internet trolls say bailiffs can add VAT on high court enforcement fees.

[Syd Snitkin]

But we've been saying for years that they can't. Thankfully HMRC and knowledgable advisors agree with us. Just a shame that the trolls have cost debtors unnecessary charges.

[zeke]

The debtor can reclaim them within 6 years, or if the bailiffs says its a mistake, the limit is extended indefinitely.

I discovered that rule on indefinite claims after a court fine debtor paid £77 in bailiffs fees on a court fine in 1992. The debtor successfully recovered it in 2009. The claim was dissed by the district judge, who said the claim had no merit, but the claim was allowed with costs on appeal.

This was before the 2014 fees regs, when there were no statutory enforcement fees (only charges - or 'disbursements' paid by the bailiff) for the enforcement of magistrates court fines

She found the receipt in an attic clear-out and went online to see if anything could be done.

[Syd Snitkin]

It is a shame that they continue to mislead debtor's know. I mean have they never seen the offical advice....



Since 2014, the Taking Control of Goods (Fees) Regulations 2014 have prescribed the fees that are allowed to be charged by enforcement agents. However, there was no explicit mention of High Court Enforcement Officers (HCEOs) being able to charge VAT to the debtor instead of the creditor.

Regardless of this, HCEO’s have regularly charged VAT to debtors and adamantly insisted they have a right to do so when challenged by debt adviser across the country.

To put this into context, VAT is charged to the customer when providing goods or services, which can then be recouped if the customer is registered for VAT.

As such, the approach of HCEO’s should have always been to charge VAT on their services to the creditor and not the debtor.

HMRC released a VAT notice, which provides their interpretation of the law, but does not have any legal force, in 2016, which set out that VAT should be charged to the creditor, yet this argument was ignored by HCEO's.

Finally, clarification has been provided by the government via a response to a Parliamentary Question in the House of Lords.

The government’s response was as follows:

Debt collection services carried out by High Court Enforcement Officers are subject to VAT according to the normal rules and any VAT due is payable by the creditor who receives the service. The debtor is not required to pay the VA

The news should come as a welcome clarification to debtors and debt advisers across the UK because HCEO’s must now stop charging VAT to debtors on enforcement fees.

A bonus is that anyone who has wrongly been charged and, paid VAT, on the enforcement fees charged by bailiffs since 2014 should have them refunded by the firms who charged it.

It is unclear whether refunds will happen automatically by firms or clients must request a refund, but it is something government should look at enforcing, which should include some penalty and/or compensation paid to the client.

Additionally, whether an individual would be eligible for interest on the amounts wrongly paid to HCEO’s is unclear. This is money that could otherwise have been, had it not been wrongly charged by high court enforcement firms, used to pay down other debt (reducing interest charges), used for required essential expenditure or saved (accruing interest) by the debtor.

As such, it would be prudent of firms to account for this or the government to take this into consideration when looking further at making sure that VAT rules continue to be applied correctly.

https://debtfree.london/news-blogs/vat- ... le-debtors

[zeke]

Solicitors never give out VAT advice on High Court fees because they make lots of money reclaiming them on a case by case basis.

DCBL for example, pays out on notice of the application to save costs, and Marston High court wriggles on the claim.

In their defence, both quote the written advice of Andrew Wilson, chairman of HCEO which states the creditor can reclaim the VAT if they want to, otherwise it's a disbursement recoverable from the debtor.

I prepared the argument comparing the VAT arrangement that the bailiff is the "enforcement agent" and they are not VAT registered, and nothing states the bailiff company is a "related party". The regulations state the "related parties" are the creditor and the bailiff.

The bailiff company is merely an agency that sources work for bailiffs and charges them a commission, in this case, for PCN's "paid in full", its £220 and the bailiff keeps £90.

The fee share agreements for High Court writs is different, and again the bailiff is self-employed and not VAT registered.

If the agency is VAT registered, then their share of the fee - or commission - attracts VAT which the bailiff pays, but that doesn't allow bailiffs to increase the fees above the prescribed.



This VAT model was created in 1971 by (then) Inland Revenue for private hire minicab and courier services, where the taxi firm is VAT registered and the driver charges the fare at the rate set by the taxi firm then pays the taxi firm their commission plus VAT. The passenger does not pay VAT on the fare. If the customer is a VAT registered business account customer of the taxi/courier firm, then the contract is between the customer and the taxi firm. The business customer pays the fare directly to the taxi firm + VAT and pays the self-employed taxi driver or courier to do the work. I simply copied it to bailiffs because the agency/agent relationship is identical. Customer = Creditor. Taxi firm = bailiff company. Driver/Courier = bailiff.

I gave the skeleton its authorities to several law firms to try out and both were successful in recovering the VAT, excess fees and costs. So it was rolled out to all firms offering detailed assessments, but we don't advertise it.

[Syd Snitkin]

You'd think even a glancing acknowledgement that this is good news for debtors would be forthcoming, but I'm guessing there's some furious keyboard tapping, email sending and Google searching looking for anything to argue that we're wrong, other debt advisors are wrong and HMRC are wrong, and that debtors must pay the extra. Bit sad and nasty if so.

[Syd Snitkin]

Well it's been a week, and not a single word from the trolls acknowledging their error on this over the past few years. Did we expect anything less?

[zeke]

Its because its been defeated at court at the Queens Bench level.

I deliberately used two different law firms to see how their respective senior partners would objectively present the VAT argument to a costs judge.

Even if the VAT was allowed, I would have been interested to see how HMRC would have reversed over 50 years of VAT regulations on the taxi and courier industry.

It reminded me of the McVities Jaffa Biscuit VAT test on the High Court when HMRC argued that a Jaffa Cake is a Jaffa Biscuit because cakes don't attract VAT, where as biscuits do and McVities should pay VAT on its Jaffa Cakes

[Syd Snitkin]

Ireland had a similar case where the courts decided the bread used at Subway wasn't bread but a confectionery due to the sugar content. I always knew there was something a bit off about their rolls.

[Syd Snitkin]

They've gone completely silent on this topic now. Well, I say 'they' but we all know which silly old duffer I mean. Not a single word of contritition, but to be expected I suppose.

[monkeynuts]

I prepared the argument comparing the VAT arrangement that the bailiff is the "enforcement agent" and they are not VAT registered, and nothing states the bailiff company is a "related party". The regulations state the "related parties" are the creditor and the bailiff.

Do you have a copy of a skeleton argument at all I can look at? I've had a couple of cases drop on my work desk on this and normally just direct the advice to what the Governments line is and not Mr Wilson's.

[zeke]

Its not allowed, solicitors dont allow their documents to be shared.

[monkeynuts]

I thought you prepared the argument. No worries though I will work on one!

[zeke]

I can show it to you but it cannot be shared with anyone else.

[monkeynuts]

I can show it to you but it cannot be shared with anyone else.

It won't be shared

[Syd Snitkin]

It's sad really - I mean, we've literally held their hand and led them to the official advice and court rulings that say VAT should net be charged but they still argue the opposite. Their reason? That bailiffs are still charging VAT so it must be allowed. Yeh that's right, they agree with the bailiffs.

[zeke]

I used to get DCBL by the dozen, and even built a detailed assessment Case Management System with built in document compiler.

It was pumping out detailed assessments like a sausage machine, then on came the pandemic, and Ive not heard a word out of DCBL. Gary Brown is long gone, and Ive not had a Craig Fishwick case for months now.

At the moment, the case workload is mostly drive-by clamping. Taxi and leasing companies getting their vehicle stock clamped and applying to court to release them and filing for damages in the small track, or represented, as a CPR84.13 application.

This too has a CMS but its not as exacting as a High Court detailed assessment.

[Syd Snitkin]

As predicted, they've spent the last 3 weeks trying to ensure that debtor's continue to pay for VAT that they're not meant to be paying. Why do they want to do this? What is the motive? To repeat, yet again, the answer was given in the House of Lords in 2019:

https://questions-statements.parliament ... 0-15/HL133

The 'debtfree' website clarified even further:

The news should come as a welcome clarification to debtors and debt advisers across the UK because HCEO’s must now stop charging VAT to debtors on enforcement fees. https://debtfree.london/news-blogs/vat- ... le-debtors

Bizarrely, they continue to think this sentence from VBNB41720 backs them up.

The full amount charged, including tax, is recoverable from the debtor. https://www.gov.uk/hmrc-internal-manual ... /vbnb41720

But they fail to read the rest of that paragraph:

Therefore, where:

the judgment creditors are registered for VAT; and
the debt relates to their taxable business activities

the VAT on the Under-Sheriffs and Sheriffs Officers enforcement services may be recovered by the judgment creditors.

They seem to be confusing enforcement fees with the fees allowed under the Sheriff Court Fees Order. I wonder if me posting what the HCEOA has to say will make any difference?

Of course this does now mean that these wicked old fools will be contacting their MPs demanding that this be reversed, but I guess that's how their evil minds work.

[zeke]

There is very little writ enforcement activity at the moment, but of that small number the VAT charges are defeated because the bailiff "enforcement agent" is not VAT registered.

I don't think there will be another McVities moment, but if there were, HMRC could start calling in VAT receipts from bailiffs going all the way back to 2014.

[Syd Snitkin]

Well, I'll give the nutters one final chance before posting what the HCEOA say (which agrees with what we've been saying) - let's see what side they want to plant their flag. The debtors or the bailiffs?

[monkeynuts]

Its probably Andrew Wilson who is ghost writing!!!!!

[Syd Snitkin]

It's good to know that it's old Mr Shifter who has finally decided where the flag was planted - firmly on the side of the debtor. So let's now let him know exactly what the position is.

Enforcement fees are not subject to VAT. No ifs, no buts, they do not come under the scope of VAT as they are not a service that is provided to the debtor.

Shall we see what the HCEOA say? Ok, let's.

Debtors are not, therefore, charged VAT on High Court Enforcement Fees. https://www.hceoa.org.uk/news/130-vat-o ... ement-fees

Is that clear now? Can we make it any clearer?

The mistake he's making is confusing enforcement fees with those under the Sheriff Court Fees Order 2018. He doesn't seem to understand that those fees are nothing to do with enforcement fees, they are the fees the Bailiff can charge the creditor for his services, such as issuing a writ, providing certificates and so forth. They are nothing to do with enforcement fees whatsoever.

It's these fees that can attract VAT, and this is what recoverable from the debtor. NOT THE ENFORCEMENT FEES

So whenever you see an HCEO charging £75 + VAT for an enforcement notice, or £190 +VAT enforcement fee stage 1, or £495 +VAT for the second stage, they are acting illegally and are keeping that money for themselves.

So The HCEOA say enforcment fees do not attract VAT, debt agencies say they cannot, HMRC say they cannot and even the House of Lords say they cannot, yet Mr Shifter says they are all wrong and he's right.

Unbelievable.

[monkeynuts]

Why is it that so many just 'believe' the likes of DCBL and the rest of the thugs because 'its what they do as their job. There's enough commentary on the VAT issue to easily understand it.

HCEO's love stacking up extra fee's because the debtor will in most cases assume that they (HCEO) are the 'professional' and they surely wouldn't line their own pocket...

[zeke]

Who is Mr Shifter?

[Syd Snitkin]

And despite all of this, despite it being clearly spelled out with links to the evidence, and despite the HCEOA, HMRC and the House Of Lords confirming VAT must not be added to enforcement fees, they are still denying it's true. Utterly shameful behaviour.

Let's throw down a challenge - prove that we're wrong. Show us an official source that says VAT can be added to enforcement fees. One tip though - don't rely on this fella > https://www.youtube.com/watch?v=dNJ6qITQts0

[monkeynuts]

I suspect this sentence will be used:

Debtors are not, therefore, charged VAT on High Court Enforcement Fees, but in some circumstances do pay the VAT charged to the Claimant.

[Syd Snitkin]

I suspect this sentence will be used:

Debtors are not, therefore, charged VAT on High Court Enforcement Fees, but in some circumstances do pay the VAT charged to the Claimant.

And that is where they confuse themselves. That means any fee under the 2018 order mentioned above, eg issuing writs, petitions, certificates, and so
forth. The full list is here > https://www.legislation.gov.uk/ssi/2018 ... ule/3/made

These are all fees for services provided to the credior or client, nothing to do with enforcement fees under the 2014 regs. VAT is only recovered in some circumstances because if the creditor is VAT registered they pay the VAT to the HCEO and then reclaim it from HMRC. If they are not VAT registered then they cannot reclaim it and becomes recoverable from the debtor.

But the bottom line is, no matter how they want it to be true, the enforcement fees under the 2014 regs do not attract VAT. It's funny because depending on which HCEO website you look at, some will still say VAT will be added whilst others do not. Only one of those stances is wrong - the HCEOA, HMRC and the HoL has explained which one it is.

[monkeynuts]

Completely agree. It's the old adage of I believe them (in this instance Wilson) because they work in that profession). Rather than doing the groundwork themselves

[Syd Snitkin]

The Freeman of the Land rubbish has of course been brought out now, a sure sign they know they're wrong but can't admit it.

Perhaps they'd like to tell us which part of the HCEOA clarification that, and I quote, "Debtors are not, therefore, charged VAT on High Court Enforcement Fees" is FotL?

Perhaps they can expand how the House of Lords clarifying that, and I quote "The debtor is not required to pay the VAT" is FotL?

Maybe an explanation to how HMRC clarifying that "The total fees and allowable expenses payable in respect of services provided by the different people involved are set out in the relevant Sheriff’s Fees Order" does not refer to the Sheriff Court Fees Order?

They might even care to let us know why 'Debt Free London" in partnership with 26 charities, plus the Money and Pensions Service and the Mayor of London are spouting FotL when they say "HCEO’s must now stop charging VAT to debtors on enforcement fees."

More importantly, perhaps they would like to explain why there are only 2 parties that continue to insist that VAT is added to enforcement fees - the bailiffs; and their squalid little message board?

Of course they won't be able to explain any of this, but thankfully everyone else will see what a ridiculous, petty and ignorant bunch they are.

[monkeynuts]

Never argue with an idiot - the idiot tends to take you down to their level lol

[Syd Snitkin]

Completely agree. It's the old adage of I believe them (in this instance Wilson) because they work in that profession). Rather than doing the groundwork themselves

That's how their logic works - the bailiffs do it so it must be lawful. Just like when DCBL front load all enforcement stage fees on a first visit; clampimg cars on HP or with a blue badge; when they threaten locksmiths for a civil debt; when they say they'll call the police....

They're stance would be - "well it must be lawful because they must know what they're doing". "They must be allowed to charge VAT on enforcement fees, because they do it".

Because as we all know, bailiffs are absolute pillars of society who would never try to line their own pockets, would they?

[monkeynuts]

By using that logic I assume that in days gone by they believed the old style London bus also sold OXO as that's what was emblazoned on its side!

[Syd Snitkin]

His latest theory is that because it's the fees are paid to the EA rather than the HECO, they can charge VAT. What a complete moron. No you twonk, the EA merely collects the fees, they are not his to keep. For heaven's sake, is he soft in the head or something? The HCEOA, HMRC, Debt Free London and the House of Lords have all said enforcement fees do not attract VAT, yet still he persists, seemingly for the sole reason that it agrees with what this board has been saying for years.

He even tried to cite schedule 12 which has nothing to do with fees. Chimpy, surely you must know by now that schedule 12 is what give the bailiff the power to enforce, not what he can charge. I despair.

He claims I've taken what the HCEOA have said out of context, so let's post the full sentence:

Debtors are not, therefore, charged VAT on High Court Enforcement Fees, but in some circumstances do pay the VAT charged to the Claimant.

So debtors are not charged VAT on enforcement fees, that is clear, and do is some circumstances pay the VAT that the claimant has needed to pay to the HCEO. Clearly that couldn't be in regards to the enforcement fees.... because the claimant doesn't pay those, does he chimpy?

He's still proving he can't read what's written, claiming that I said he is one of two people who believe debtors pat VAT on enforcement fees. Shall we recap what I wrote?

More importantly, perhaps they would like to explain why there are only 2 parties that continue to insist that VAT is added to enforcement fees - the bailiffs; and their squalid little message board?

It can therefore be assumed that he admits that 'their squalid little message board' means only him, which in turn means he. and he alone, is the message board - they are the same entity with nobody else involved. Nice one Shifter, revealed the truth there.

[Willowbee]

The HCEOA have issued new guidance starting on 1st August...

https://www.hceoa.org.uk/news/217-hceoa ... ement-fees