Welcome to the trust deed forum toughtimes.

There has been quite a lot of comment here about the VAT issue that has affected insolvency practitioners. It was quite unexpected and has caused some confusion and delays while advice is sought and decisions made in respect of this.

Our impression is that most firms have now worked through this and that the VAT issue isn't preventing them from closing cases.

The PPI issue is difficult. Because your trust deed was signed prior to April 2008 I don't think there is a way for your trustee to discharge you from your trust deed and carry on with the PPI investigations and claims.

I'm afraid this may leave you (and your trustee) in a position that discharge isn't possible until the PPI claims are resolved. If it were me, I'd be seeking regular updates on the status of the PPI claims to make sure they are being properly and thoroughly worked to maximise the chances of them being completed soon.

Thanks for the reply. Although there has been a bit of a delay regarding the PPI, to be fair on the Trustee that situation has really only become clearer re the legislation late 2011/early 2012. My concern is not about the outstanding PPI claims - claims through the Trustee have already been successful and the timescale on the remainder is minimal - my real concern is this VAT issue...

My understanding from talking with the Trustee is that the VAT issue is unresolved (similar to the PPI issues at one time) - in other words the matter is outwith their hands and has to be decided upon externally. Until this is resolved my case cannot be closed.

However, are you therefore saying that the matter HAS been resolved externally in terms of how IPs know where they stand in respect of these matters with the VAT office, and as such it is therefore individual IPs/Trustees who are "working through" it in their own timescale?

So to clarify - I can go back to my Trustee when the PPI is resolved shortly and request the case be closed/discharged? How should I respond if they indicate the VAT issue is being "worked through". Do I ask that the matter be resolved within a time limit? And what time limit is reasonable?

Hi toughtimes.

All insolvency practitioners have had to seek their own advice, and make their own decisions, in connection to their own VAT position. They have also received guidance from their regulatory bodies.

That makes it very likely that some firms will be quicker than others to determine their position and move forwards.

Perhaps Chris, Shona, Kevin or Mark could share their thoughts on where the industry current stands in terms of resolving the issue of VAT not being chargeable on trust deeds?

Thanks for the reply TDA. I am reading between the lines here but I take it you are saying the matter has been resolved externally, so the onus is now on each firm to sort it out internally with their clients? I accept some firms therefore will be quicker than others - but I would pose the question again - what is a reasonable timescale to wait for this matter to be resolved by my Trustee bearing in mind the PPI issue is about to be concluded and my last contribution was summer 2010?

Sorry to repeat - but surely the onus is on the Trustee to extract the vat element/issue from the figures and close off the Trust Deed? The longer it continues the Trustees fees increase, the dividend for creditors is reduced and the debtor (i.e. me) is left in limbo. Could that not be legally challenged?

You'll have to be the judge of what's reasonable in terms of timescales toughtimes. The options of complaining to the firm themselves and then the professional body of the trustee are open to you if you consider that to be appropriate.

The external background is that an IVA firm in England challenged HMRC on the subject of whether IVA services should or shouldn't be subject to Vat. They won the case. The verdict has subsequently been extended to trust deeds (which are in some ways similar to an IVA) afterwards.

That has left trust deed firms to ponder exactly what they do about Vat charged on cases and also Vat reclaimed on purchases related to the cases. It also opens questions about how exactly any surplus created by Vat no longer being chargeable should be dealt with.

None of this is, of course, your problem. I do hope things aren't held up for long.

TDA - Thanks for the reply. Could you clarify for me when the decision was made so that it "extended to cover Trust Deeds" - you say it was "afterwards" - what month was that please? When the PPI issue is concluded shortly I will therefore then know how long the Trustee has had to resolve this matter. As far as I am concerned it has taken 2 years to sort out the PPI matter (albeit subject to legal decision) and my payments ended 2 years ago (after an unblemished 3 year record of contributions). So I am of the opinion this other matter needs to be sorted out!

Hi toughtimes,

We first started writing about the VAT issue in September last year. See:

(Blog now removed from website)

That may help you in terms of the timelines involved I hope.