Skip to main content

Top Service News

Government poised to further extend moratorium period on winding up petitions and change in practice to VAT High Court enforcement fee

Published on

To help protect businesses from insolvency, several changes were introduced under the Corporate Insolvency and Governance Act (2020) (Coronavirus) including the restriction of statutory demands and winding-up petitions which have previously been extended on a number of occasions up until end of 29th June 2021, means winding up petitions are prohibited if the statutory demand served was between March 2020 and September 2020.  

Under the Corporate Insolvency and Governance Act it is expected that a further extension to the moratorium period for issuing winding up petitions and statutory demands, against companies, will be announced. If passed, it will see a delay of 3 months to the 30th September 2021. 

UK Government is also amending VAT on High Court enforcement fees as a change in practice on charging VAT on High Court Enforcement fees, payable under Writs of Control, is set to come into effect soon.  The suggestion is that this will take place from 2 August 2021. 

Ahead of new guidance from the UK Government, prompted by an ongoing court case, the High Court Enforcement Officers Association (HCEOA) is recommending a change in the treatment of VAT on High Court Enforcement fees. This change is particularly relevant to cases where the judgment creditor is VAT registered.

If the judgment creditor can recover VAT from HMRC:

•  Where a judgment creditor is VAT registered, the HCEO will not recover VAT on their fees from the judgment debtor

•  Instead, the HCEO will deduct a sum equivalent to the VAT element of their fees from the funds recovered from the judgment debtor and pay this to HMRC

•  An invoice addressed to the judgment creditor marked ‘paid’ will be forwarded to the judgment creditor from the HCEO (via SBL), along with the balance of funds they are due

•  The judgment creditor can then claim this VAT from HMRC in the normal way

If the judgment creditor cannot recover VAT from HMRC:

•  The HCEO will continue to collect a sum equivalent to the VAT from judgment debtors

•  This sum will continue to be paid to HMRC

•  In line with expected Government guidance, the HCEO will issue a VAT invoice to the judgment creditor via SBL.

Emma Miller, Top Service Company Director says;

“With court fee’s increasing and the restrictions on winding up petitions remaining in place we are seeing more and more customers reviewing their current collection methods and looking for alternatives to court action. At Top Service we have adapted our collections methods to suit the struggles of contacting companies who are working from home and potentially on furlough – achieving great results. We advise members to look at their options for collection, take advice from their collections service provider on the best course of action and consider all options.” 

Are you struggling to recover the money you are owed?

Top Service debt recovery service is operating normally. Our team are proving that their skills are second to none with the results we are achieving during this challenging time. Top Service members have access to an exclusive combination of no collection, no fee recovery services.

Contact our helpdesk team today on 01527 518800 to discuss how Top Service can support and help you protect your business.