Thursday, January 05, 2012

Rebating SoS fees on VAT reclaims busted!

Ah well, it was worth a try…

You may already have seen this, but if not the text below is taken from a message to IPs that was issued today. It appears that the Insolvency Service have found some legal advice that overturns their original internal memorandum and allows them to reject your claims to rebate Secretary of State fees on VAT reclaims. We are disappointed, as we think that this is just a dodge to avoid repaying money that they should not have had in the first place since they are getting fees on fees, but there is not much we can do against the might of the Service and their legal resources, although if you know a friendly insolvency lawyer who wants to mount a challenge on a pro bono basis…

Our view is that the Insolvency Service should not seek to recover Secretary of State fees that they have already rebated, but let us know if you come across instances where they are seeking to do so.

The Secretary of State’s administration fee on VAT reclaims

There has been confusion surrounding the charging of the Secretary of State’s administration fee on VAT reclaims arising from transactions undertaken in the course of the bankruptcy or liquidation.

The Service has now received legal advice on the position, a summary of which is set out below.

The Secretary of State administration fee covers the performance of the Secretary of State’s general duties under insolvency legislation. It is chargeable in respect of ‘chargeable receipts’ which are defined in paragraph 1(1) schedule 2 of The Insolvency Proceedings (Fees) Order 2004 as being ‘those sums which are paid into the Insolvency Services Account after first deducting any amounts paid into the Insolvency Services Account which are subsequently paid out to secured creditors in respect of their securities or in carrying on the business of the company or bankrupt’. There is no reference to fees not being charged on VAT reclaims or mention of any other amount upon which the fee would not be charged.

Therefore on the basis of the wording of the Fees Order and the definition of chargeable receipts, the Secretary of State’s administration fee is payable on VAT reclaims.

Any outstanding requests to rebate the Secretary of State’s administration fee on VAT reclaims received from Insolvency Practitioners will not be actioned.

Any queries regarding the above should be directed to Helen Day, Estate Accounts and Insolvency Practitioner Services, 3rd Floor, Cannon House, 18 Priory Queensway
Birmingham, B4 6FP; telephone 0121 698 4072, e-mail”