Final Guidance on VAT from the Ministry of Justice



After a long hard slog from The High Court Enforcement Officer’s Association (HCEOA) the Ministry of Justice have finally confirmed how and when VAT should be charged on enforcement fees, as well as who should pay the VAT.


The HCEOA still believe that VAT should not be charged on enforcement fees at all, but the organisation has worked with the Government (on behalf of its members) to seek the best way forward for all stakeholders.


This isn’t (and never has been) primarily about bringing down the cost of enforcement for creditors, as some detractors and critics might say, but it is also about ensuring that vulnerable debtors are not lumbered with an unnecessary extra burden of VAT fees to cover, when they already find themselves in a difficult position.


Again, the HCEOA still believes that the fairest solution would have been to scrap VAT on enforcement fees altogether, but this isn’t a perfect world.


The way forward represents a firm change in the way VAT fees are charged on enforcement fees, however many companies had already adopted this approach, as we have previously reported.

The difference lies mainly with whether or not a creditor is VAT registered…


If a creditor is VAT registered, they will pay the VAT on enforcement fees, in the knowledge that they’ll be able to claim it back down the line.


Where a creditor is non-VAT registered, the debtor will pay an amount that equates to the value of the VAT on the enforcement fees, on top of the fees and actual debt themselves.


Full and detailed guidance can be viewed on the MoJ’s official publication on this subject, but for now, #TeamCES wants to thank the HCEOA for all their hard work in helping to bring about this change.


It has been considered as ‘the best way forward’ for some time now, and until VAT is removed from enforcement fees altogether, it is now ‘the only way forward’, given it’s signed, sealed and delivered status from the Ministry of Justice.


Now, as ever, it’s time to get on with the job at hand.

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