IVA VAT exemption & refund to IVA

uphillalltheway

I have just received a letter from payplan stating that HMRC are refunding the VAT from my payments. I am almost three years into a six year IVA agreement. This payment is likely to be around the £1500 mark or more.
If my payments included VAT and this been returned then surely my 72 monthly payments should now be reduced by a couple of months? :mad:
PS I blame my self 90% for my debt, 5% to the government for not teaching me in school how to manage my finances better and 5% the banks for letting me continuously borrow above my means.:(

phil2580

Hi, I work for an IVA Company and was very closely involved with the VAT refund process, so can hopefully clear the situation up for you.

The company I work for were one of the first companies to file a claim with HMRC, so the effects of the VAT refund on our clients has been dealt with now.

I think there is some confusion as to where the VAT has been charged. You have not directly been paying VAT, your contributions have gone into an account, from where your IP has drawn his fees, inclusive of VAT. As your contributions are calculated based on your disposable income, the VAT element is irrelevant in that respect.

The work involved in reclaiming the VAT is actually very labour-intensive, with the reclaim figure needing to be worked out on a case-by-case basis due to the various modifications creditors put forward. In some cases, the IP may be able to retain any VAT refund as extra fees, but in the vast majority of cases, the VAT will be paid into the estate and distributed to creditors. Only if this results in a payment of 100p/£ plus statutory interest (8% pa), will you see any reduction in payments.