Trust Deeds will not be hit by the tax man
It follows landmark court ruling regarding debt solutions provider
Trust Deeds have escaped the clutches of the tax man, according to guidance issued by insolvency’s leading bodies.
The document – which was compiled in the wake of a major court ruling – confirmed HMRC will not tax these Scottish personal insolvency strategies.
It comes after debt solutions provider Paymex Group last year won its battle against HMRC over tax charged on individual voluntary arrangements (IVAs).
The report also stated HMRC has since confirmed fees in all types of company voluntary arrangements (CVAs) and Partnership Voluntary Arrangements (PVAs) are also free from tax.
It stated: “Insolvency practitioners (IPs) should ensure that their firms stop charging VAT on invoices for fees and disbursements in IVAs, company voluntary arrangements (CVAs) and partner voluntary arrangements (PVAs) with immediate effect.”
The document also advised IPs as to how to go about reclaiming VAT regarding ongoing and closed cases, as well as the processes involved in recovering the money owed.
The time limit for making claims will be four years. Among the seven industry bodies which compiled the report were R3, the ICAEW, the IPA, ACCA and the Debt Resolution Forum.
Last year, Martin Ruffles, owner of law firm Ruffle and Co who represented Paymex, said: “Although this case is specific to Paymex, I don’t see how HMRC could be able to refuse exemption in IVA cases in future that match the criteria in this Paymex case.”