Should the government charge VAT on bailiff fees?

[HCEOs]

With the likely introduction of the new fixed fee scheme under part 3 of the TCE Act would it not be sensible for the government to make these fees zero rated for VAT?

 

With this so called Value Added Tax currently set at 20% it forms no small part of what is payable by debtors.

 

Has this been considered by the Advice Sector?

[brassnecked]

With the likely introduction of the new fixed fee scheme under part 3 of the TCE Act would it not be sensible for the government to make these fees zero rated for VAT?

 

With this so called Value Added Tax currently set at 20% it forms no small part of what is payable by debtors.

 

Has this been considered by the Advice Sector?

 

Don't think the advice sector are fully aware, this is the first I have heard of this, thanks for the heads up HCEOs, I feel you are correct they should be zero rated for VAT

 

Looks like they want to benefit the Treasury from Enforcement fees. This one will ghast the flabbers of the advice sector, the new fee structure. as in £305 at the bailiffs knock plus 20% becomes £366, so if they cannot afford the debt, how the hell are they going to afford the fees plus the obnoxious VAT. What flaming planet are these cretins on?

 

The debtors are just a Milch Cow for the government at this rate.

[caro]

What value do they add?

[ploddertom]

Since when did governement & sense appear in the same sentence.

[HCEOs]

Somebody needs to be banging the drum loudly on this before the final statutory instrument is laid shortly.

 

I know tomtubby has been part of the process and has a certain amount of access to the MoJ.

 

I'll happily provide the drum.

Edited November 18, 2013 by HCEOs

[brassnecked]

Somebody needs to be banging the drum loudly on this before the final statutory instrument is laid shortly.

 

I know tomtubby has been part of the process and has a certain amount of access to the MoJ.

 

I'll happily provide the drum.

 

We will help you bang it then

[wonkeydonkey]

Somebody needs to be banging the drum loudly on this before the final statutory instrument is laid shortly.

 

I know tomtubby has been part of the process and has a certain amount of access to the MoJ.

 

I'll happily provide the drum.

 

 

As I understand it there are a whole row of drummers already banging loudly to a government wearing earplugs!!!

 

Vat at 20% on fixed fees is ludicrous...they don't need to set the rate at zero they simply need to forget it all together.

 

April 2014 is going to be a nightmare....when it all kicks off and quickly shows itself to be unworkable,we will end up with yet a further costly exercise with government trying to work out where it has all gone wrong!!!!

[brassnecked]

As I understand it there are a whole row of drummers already banging loudly to a government wearing earplugs!!!

 

Vat at 20% on fixed fees is ludicrous...they don't need to set the rate at zero they simply need to forget it all together.

 

April 2014 is going to be a nightmare....when it all kicks off and quickly shows itself to be unworkable,we will end up with yet a further costly exercise with government trying to work out where it has all gone wrong!!!!

 

They will not realise the major problems they have caused kicking hard pressed people when they are down until a mob smashes up a Rossendales, Crapquita, Ross 'n Robbers, Phoenix, Bristols & hooters, Collectica, Excel or Marstons Berlingo when they go in after that family on benefits on the sink estate where the 8% council tax benefit shortfall has turned into £500 arrears plus £80 court fee for the 3 quid it cost the council for the LO plus the new bailiff £305 first call fees plus 20% VAT.........

 

They thought the Poll Tax riots were bad, this one has the potential to cause serious civil unrest.

 

I can see bailiffs demanding a police escort for enforcement on some estates, it will be worse than trying to evict travellers from Dale Farm, and will have the potential to heap odium on the whole Enforcement and County court system.

Edited November 18, 2013 by brassnecked

[topcat1802]

Perhaps that's the idea! They discredit the whole bailiff system so they can get rid of it! its an archaic system anyway and should have been abolished a long time ago!

[brassnecked]

Perhaps that's the idea! They discredit the whole bailiff system so they can get rid of it! its an archaic system anyway and should have been abolished a long time ago!

 

Lord Denning tried to do that as Master of The Rolls in the 1980's, but they undermined him. He showed too much Common Sense rather than Common Purpose you see. they spent the next decade trying to overrule his commonsense judgments.

 

Distress and distraint as remedies belong back in the 13th century with King John and the Sheriff of Nottingham, it has no place in a modern society.

[topcat1802]

Can't wait for the Anti-Bailiff riots to start then! I think if I was a bailiff I would start looking for a real job as soon as possible (or leaving the country).

I think it won't be the bailiff's van on bricks in future it will be the bailiff's van in flames, perhaps you should change your picture!

[brassnecked]

Can't wait for the Anti-Bailiff riots to start then! I think if I was a bailiff I would start looking for a real job as soon as possible (or leaving the country).

I think it won't be the bailiff's van on bricks in future it will be the bailiff's van in flames, perhaps you should change your picture!

The aren't that daft, they would strip the Berlingo first before torching the shell....

 

But seriously, they are going to get a whole heap of trouble over this one, even though they have had ample warning, even from the enforcement companies themselves, as from their point of view VAT is worse than a non compliant debtor, and the VAT man more scary than the Kraken.

[wonkeydonkey]

The aren't that daft, they would strip the Berlingo first before torching the shell....

 

But seriously, they are going to get a whole heap of trouble over this one, even though they have had ample warning, even from the enforcement companies themselves, as from their point of view VAT is worse than a non compliant debtor, and the VAT man more scary than the Kraken.

 

 

There insurance will go up dramatically........... a van load of debtors goods gone up in smoke then the debt gets paid and the goods are to be returned!!!!!!!

[brassnecked]

There insurance will go up dramatically........... a van load of debtors goods gone up in smoke then the debt gets paid and the goods are to be returned!!!!!!!

 

Jacobs know all about that one having had to buy back unlawfully removed and sold and return motors to third parties, notably a VW camper.

 

Don't think they have thought the implications of this one properly, either that or Gideon has told them they need the VAT to help pay down the deficit, and help him give more tax breaks for the bankers and utilities in the next budget...

 

And someone has to make up for the tax Amazon and the others have avoided

[tomtubby]

Somebody needs to be banging the drum loudly on this before the final statutory instrument is laid shortly.

 

I know tomtubby has been part of the process and has a certain amount of access to the MoJ.

 

I'll happily provide the drum.

 

Still recovering from major surgery and hopefully back to work soon but at least I can use the laptop. Still a bit "fuzzy" so excuse spelling or other errors!!

 

MOJ dropped the "bombshell" about the "possibility" of VAT being added to the new fee scale at a meting at HOL approx 6 weeks ago.

 

It is fair to say that I made my feelings known to MOJ and they were left in doubt that if VAT is to be added this will have very serious implications for debtors because, the "administration fee actually PAYABLE will not be £75 but will be £90 and the "enforcement fee" of £230 will be £275. In other words, if the debtor fails to pay within the strict time scale (7 days) of the initial letter then a personal visit will be made and the debtor will be liable for £365. This will apply to all PCN's, Liability Order and Court Fines etc.

 

I have been "off the radar" for the past couple of weeks but John Kruse said at the weekend that he understands that MOJ have now AGREED to add VAT of 20% to bailiff fees. MOJ need to put the "brakes on" and think very carefully where they are going because there will be mayhem if this is implemented. I will look into this tomorrow.

 

Presently there are huge problems with many local authorities who are finding who are struggling with so many cases of

[brassnecked]

Nice to see you back TT, hope you are well on the mend, this mistaken bone-headed idea can only be due to pressure from Gideon (Osborne) and the Treasury, to implement some EU Harmonisation Directive on VAT, or just greed from an out of touch government.

[HCEOs]

Just for info, as I understand it VAT is currently charged on CT debt but it is invoiced to the Council by the Bailiff Company rather than the debtor paying it. I'm unsure if this practice will continue though under the new regime.

 

VAT is paid by the debtor in Rent, Parking and HCEO fees.

 

To rub further salt in the wound those who pay it are unable to recover it according to HMRC.

Edited November 19, 2013 by HCEOs

[tomtubby]

Just for info, as I understand it VAT is currently charged on CT debt but it is invoiced to the Council by the Bailiff Company rather than the debtor paying it. I'm unsure if this practice will continue though under the new regime.

 

VAT is paid by the debtor in Rent, Parking and HCEO fees.

 

To rub further salt in the wound those who pay it are unable to recover it according to HMRC.

 

 

 

The application of VAT is very strange indeed and you are correct in that the VAT is charged on PCN, Rent and HCEO fees.

 

It is NOT charged to the debtor on council tax debts and is indeed invoiced to the council in the way in which you have described. This is a complicated subject but essentially this id due to the fact that the bailiff fees (for council tax) BELONG to the Local Authority and NOT the bailiffs and this is outlined in council tax legislation. To get around this the government introduced the the Contracting Out of Council Tax regulations.

 

I cannot see how it will be possible for bailiffs to charge VAT on council tax debts without amending at the very least.....2 statutory regulations.

 

As I have said, this is too much too soon.

 

I am still trying to wade through the many emails and documents that I have received in the past 2 weeks but of serious concern, is the overwhelming number of local authorities who are finding that tenants are defaulting on their RENT and their COUNCIL TAX following the introduction of the "bedroom tax".

[HCEOs]

So coming back to the issue at hand, it's clear that the government (via HMRC) are making a very tidy sum from the combined turnover of the enforcement industry, much of it paid by debtors and which can't be reclaimed by those that can.

Edited November 19, 2013 by HCEOs

[tomtubby]

So coming back to the issue at hand, it's clear that the government (via HMRC) are making a very tidy sum from the combined turnover of the enforcement industry, much of it paid by debtors and which can't be reclaimed.

 

We only have 4 months before the new fee scale is implemented and every day further news is coming out of MOJ. I will be posting an update of the new regs in the next few days in any event.

 

Barely any local authority (or bailiff firm for that matter) are making any preparations for new new changes.

 

What is becoming increasing clear is that government agencies are making a fortune out of those in debt. Let me give some examples:

 

Last year approx 3.3 million Liability Orders were issued by LA's. Because of a frankly crazy situation that arose in 1997 London local authorities were able to enter into separate negotiations with their relevant Magistrate Court to agree the costs that they (the LA) can apply to each debtor when applying for a Liability Order.

 

The present position is that many LA's are now obtaining agreements with courts that are excessive in the extreme. Given that so many LA's have been seeking substantial upgrades it is difficult to provide an accurate figure but roughly speaking, the LA's are charging approx £100-£110 per Liability Order.

 

The position with NNDR is altogether different where the amount is as high as £250 ( I have recently written to senior government figures on this as it would seem that they CANNOT charge fees such as this !!!....an interesting development and furthermore....I am right).

 

Simple mathematics will demonstrate that councils are making a fortune out of these "costs" .

 

The Magistrate Court charge the LA a fee of £3 for each Liability Order and this is to cover the costs only of the court staff. The revenue into the courts for this fee alone is nearly £10 million !!!

 

The Traffic Enforcement Centre (part of Northampton County Bulk Centre) charge each LA a fee of £7 for each of the 1.7 million road traffic debts registered with them. That's another £12 million.

 

Very few if any of the 3.3 million households subject to a Liability Order are REFUSING to pay their council tax . Instead, for one reason or another they fell into arrears. Legislation provides that if there are just 2 defaults in the council tax year that the right to pay by direct debit ends and that instead, the entire balance for the FORTHCOMING year becomes due and payable on demand.

 

If a debtor has defaulted on two payments, commonsense alone would dictate that he could NOT lay his hands on the necessary funds to clear the ENTIRE debt.

 

Instead, what we have is that a £1,000 debt to the council will become £1,110 once summons costs etc are added and as soon as a bailiff makes just ONE visit the total demanded would rise to £1,465 ( with vat).

 

Pay Day loans companies will be having a great time !!

 

PS: Companies subject to a Liability Order will of course be able to reclaim the VAT.

[HCEOs]

tomtubby, we have been advised by HMRC that even companies registered for VAT are unable to reclaim the VAT on fees relating to the enforcement of an order.

 

This is the reason why HCEOs will not give a VAT receipt.

[brassnecked]

tomtubby, we have been advised by HMRC that even companies registered for VAT are unable to reclaim the VAT on fees relating to the enforcement of an order.

 

This is the reason why HCEOs will not give a VAT receipt.

 

Ah thanks for that HCEOs. looks like the whole thing is a crock of excrement, with no winner apart from HM Treasury and Gideon.

[tomtubby]

This is the reason why HCEOs will not give a VAT receipt.

 

 

Very interesting indeed and in fact, I spoke with MOJ approx 10 days ago and said that if VAT is applied that I will make sure that I advise everyone that a bailiff MUST provide a proper VAT receipt. I cannot see it could be possible for anyone who applies VAT to be exempt from providing a VAT receipt. It beggars belief and I can only assume that somebody will have to look into this asap.

 

However the problem that we have is that the MOJ "team" working on the new regs is now a team of ONE !!!

[HCEOs]

TT the problem lies with who the taxable service is provided to/for.

 

Technically, the service is provided to the the creditor/court and not to the debtor. Therefore the debtor is unable to reclaim it as a taxable supply.

 

Over the years we have had varying feedback from HMRC on this subject and it really seems to depend on who you talk to on the day.

 

With so many problem areas in these regulations I can see them being delayed for an October launch. It's better to get things right then bulldozer them through for political gain.

[tomtubby]

With so many problem areas in these regulations I can see them being delayed for an October launch. It's better to get things right then bulldozer them through for political gain.

 

 

Quite so.

 

With every day that passes and the snippets of info that are coming out it is becoming clear ( to me at least) that significant regulations such as this needs to have "team" of people overseeing it. Instead, that MOJ is now down to just one person.

 

I would much rather that it be delayed until October than implemented with so many unresolved areas. What everyone seems to be missing as well is that our previous Minister; Helen Grant was frankly a dreadful appointment and although she did attend one of our meetings, it is my understanding that she rarely even looked at the TCE.

 

Thankfully the "powers that be" eventually realised their error and she departed in October (her new department being Sport !!!)

 

The new Minister appears to be unable to grasp this matter either. SHAMBLES !!!

 

Eric Pickles (DCLG) and the Secretary of State at the DfT are also looking closely at bailiffs and the way in which they enforce road traffic debts. If you ask me nicely I might even send you the Briefing Paper's !!! They make good reading......