The First Tier Tribunal decision in the case of Paymex Ltd, covered in the August issue of tax.point, indicates that some services provided by insolvency practitioners, in very limited circumstances, are VAT exempt. Last month HMRC issued a statement setting out how they propose to deal with VAT repayment claims arising from the Paymex case.

There are three main points to the HMRC Revenue and Customs Brief 35/11.

1. The Tribunal decision does not deal with Company Voluntary Arrangements (CVAs) or Partnership Voluntary Arrangements (PVAs). Claims for a refund of overpaid VAT arising from an involvement with either of these types of arrangement will be rejected.
2. There is no obligation on the part of the insolvency practitioner to make a VAT refund claim. Such claims may trigger input credits adjustments. While by and large, the refunds will be subject to the normal VAT conditions and time limits, HMRC will not, as they put it, disturb the past unless the practitioner wishes to do so.
3. A refund claim may be rejected on the principle of unjust enrichment.

The Revenue and Customs Brief 35/11 is available at http://www.hmrc.gov.uk/briefs/vat/brief3511.htm