Insolvency practitioners have been advised they can start claiming VAT refunds on open individual voluntary arrangement (IVA) cases, under guidance issued by the recognised professional bodies (RPBs) on a landmark court case. RPBs have issued the guidance due to the implications of a court case launched by IVA provider Paymex against HM Revenue and Customs (HMRC).

Paymex argued that in an IVA both nominees’ and supervisors’ fees should be exempt from VAT, and earlier this year the company scored a victory in court over its case. The Insolvency Practitioners’ Association (IPA) and its counterparts have now offered practical guidance on the case and have told IPs that the Paymex ruling means that VAT on previous IVA invoices for fees has been charged erroneously.

In its guidance the IPA said: "We believe IPs should take all appropriate measures to remedy the position for the benefit of creditors." The RPB has advised that it is "the office holder’s duty" to maximise realisations, and requires a supervisor to seek recovery of sums which are due to the estate. IPs have also been warned over creditors’ expectations and the exposure to action by creditors if claims are not made. The IPA said it is seeking legal advice on whether supervisors are obliged to seek refunds where the recovery would be.....Read more on this story-----> Credit Today online