The bailiff is performing services for the creditor. There is no contractual relationship with bailiff and debtors that attract VAT. HMRC published an advisory that says VAT registered creditors reclaim the VAT, otherwise, the debtor pays the VAT as a disbursement (costs) by the creditor. Debtors cannot reclaim the VAT even if they are VAT registered. If you are a debtor charged VAT, and the creditor is VAT registered, then the bailiff has been paid the VAT twice.
Bailiff charged you VAT on fees.
HMRC Advice Notice VBNB41720 states;
Judgment debtors pay the cost of sheriffs’ enforcement fees, the supplies are always to the creditors. VAT invoices for the services must be addressed and sent to the creditors. Any documents issued to debtors should make it clear that they are not VAT invoices.
This means VAT is only payable by debtors when the creditor is NOT VAT registered. Otherwise creditors recover the VAT element of the fees.
If you have been charged VAT on bailiffs statutory fees having a creditor that is registered for VAT, you can ask HMRC to investigate VAT fraud. Always include:
1. A copy of your bailiff’s document or evidence you were charged VAT
2. Evidence the creditor is registered for VAT.
3. A copy of HMRC Advice Notice VBNB41720.
HMRC also has a fraud hotline 0800 788 887
Report VAT fraud to HMRC.
Previously, by example, enforcement regulations did specifically provide for VAT on fees and recoverable from the debtor
Paragraph 10 of Schedule 1 of the Enforcement of Road Traffic Debts (Certificated Bailiffs) Regulations 1993 (which was repealed on April 06, 2014) stated;
10 In addition to any amount authorised by this Table, the amount of value added tax payable may be passed on to the debtor by adding an equivalent amount to the sum due.
You can recover VAT on fees by reclaiming it in the small claims track
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