Debtors to save millions of pounds as the Ministry of Justice clarifies the legal position for charging VAT

18 October 2021

The Ministry of Justice (MoJ) has issued legislative guidance confirming that where creditors are registered for VAT, the debtor should not be charged an enforcement fee to cover the cost of it, as it’s recoverable from HMRC.

This clarification brings a conclusion to the long-running campaign spearheaded by Just, the enforcement market integrator with the support of parliamentarians and the debt advice sector. The outcome will save debtors millions of pounds each year of unnecessary enforcement charges while still maintaining creditors' access to justice through the use of High Court Enforcement Officers at no additional cost. The published guidance can be read here.

Jamie Waller, Founder and Chair of Just, commented: “I am pleased that we managed to resolve an issue that has been outstanding for over 7 years.   

“This outcome demonstrates that an enforcement market integrator can engage with government, parliament, trade associations, agencies and the debt advice sector at the highest level to achieve fairer outcomes for debtors while still protecting creditor's rights to justice and the enforcement of their debts.  

“I would like to thank the many stakeholders including MPs, peers, members of the enforcement industry, the debt advice sector and the Ministry of Justice who have worked with us to resolve this issue since 2019. While it was difficult to get to this milestone event, we strongly believe that it was the right thing to do.”