In recent years, rules have changed on who must pay VAT on the enforcement fees for work carried out by High Court Enforcement Officers (HCEO) against judgment debtors.
To help simplify the situation, we have provided a brief guide below of when VAT is applied and who is liable, depending on the VAT status of the creditor.
Initially, to apply for a Writ of Control and transfer the matter to the High Court, we charge a creditor the following:
- Court application fee of £71.00 (there is no VAT on court fees)
- Fixed solicitor costs of £51.75 (plus VAT)
Both the court fee of £71.00 and fixed costs of £51.75 are added to the balance owed by the debtor under the Writ of Control. The creditor can account to HMRC for the VAT on the fixed solicitor costs in the normal way.
If HCEO enforcement is unsuccessful and no funds are recovered from the debtor, then they HCEO will raise an abortive invoice for £75.00 plus VAT. We will pay this and then raise a disbursement invoice to the creditor, who can again account to HMRC for the VAT. The abortive fee is also known as the compliance fee.
If the HCEO is successful in recovering the balance, then the Court application fee, fixed costs, and abortive/compliance fee will all be recoverable from the debtor.
If the HCEO recovers the balance before they make an attendance (for example, after they have received the Writ of Control and send their Notice of Enforcement) then the HCEO will not have incurred any further enforcement fees.
If the debtor does not pay once they receive the Notice of Enforcement and an attendance is needed, then the HCEO is allowed to charge for their attendances to the debtor’s premises and any escalations such as removal of goods. These fees are payable by the debtor; however, if the creditor is VAT registered, then the creditor will have to pay the VAT on these fees.
For example, if the HCEO’s fees for attending and removing goods are £1,000.00 plus VAT, the debtor will pay the £1,000.00 but a VAT registered creditor will have to pay the £200.00 VAT. Non-VAT registered creditors will not have to pay the VAT. For creditors who do have to pay the VAT, the VAT will be deducted before funds are paid to the creditor, and the creditor will be provided with a VAT invoice, which is accountable to HMRC in the normal way.
For an unsuccessful HCEO enforcement, the total that a creditor will pay is £126.75 in legal fees (plus VAT of £25.35) and a court fee of £71.00; a total of £223.10.
For successful HCEO enforcement, the fees payable to obtain the Writ of Control are added to the Writ balance and payable by the debtor. Fees for the HCEO to attend the debtor’s premises are payable by the debtor, save for VAT which is payable by the creditor if they are VAT registered.