Ministry of Justice Issues Final Guidance on VAT on Enforcement Fees
The High Court Enforcement Officers Association (HCEOA) issued guidance to its members back in June confirming how they should deal with VAT on High Court Enforcement fees going forward.
The guidance recommended members should alter their treatment of VAT on their fees, by charging VAT to creditors in cases where the instructing creditor is VAT registered. Members were asked to do so as soon as practicable and no later than 1 August 2021.
The Ministry of Justice (MOJ) has now published the final version of their guidance, which, comes into force immediately. In response to the feedback received by the MOJ, they have made several changes to it to provide further clarity on the position.
We have followed the recommendations on VAT on fees previously issued by the HCEOA since they were published and can reassure you, we are already dealing with VAT as directed to date.
However, the MOJ’s final guidance slightly changes the way in which we are to deal with VAT going forward and we will of course follow their official guidance with immediate effect.
The guidance reflects the current law, both in respect of the Taking Control of Goods (Fees) Regulations 2014 and at common law. In response to the ongoing disagreement amongst interested parties about whether the law permits a cost equivalent to the VAT on High Court Enforcement fees to be recovered from judgment debtors, the MOJ intends to legislate to clarify the current law in this area by amending the Fees Regulations and will lay a Statutory Instrument shortly. In the meantime, the HCEOA recommends members should adhere to the official MOJ guidance published this week.
The main change we have identified is that where the VAT status of the judgment creditor is not known, we are to assume that the judgment creditor is VAT registered and charge the VAT accordingly. It is therefore important that you confirm the VAT status of the judgment creditor when you are instructing us on their behalf going forward.
If you need any more information or would like to receive a full summary of the guidance please contact
Neil Jinks FCICM IRRV
Head of Client Development & Communications