VAT twice on a PPI refund

Krip

Hi guys,

I successfully got some money on a PPI claim and when that was paid to me by the bank the VAT was taken. Now the company I used to make the claim are wanting to take their fee, however, they are charging you VAT on the fee also. Is this correct? I know it's two separate payments but should I be charged VAT on both?

Many thanks,

Andy.

[Deleted User]

The bank didn't take any VAT from you.  They took the income tax.

The Claims Company will charge you VAT on the fee for their excellent services.

dunstonh

I successfully got some money on a PPI claim and when that was paid to me by the bank the VAT was taken.

You appear to be mistaken.   PPI redress (or any compensation of any form for that matter) is not subject to VAT.     The only tax on redress is income tax against the interest element of the redress.  Not the refund or premium element.

Now the company I used to make the claim are wanting to take their fee, however, they are charging you VAT on the fee also. Is this correct? 

Yes it is correct.  Claims companies are subject to VAT.

[Deleted User]

Krip said:I successfully got some money on a PPI claim and when that was paid to me by the bank the VAT was taken. Now the company I used to make the claim are wanting to take their fee, however, they are charging you VAT on the fee also. Is this correct? I know it's two separate payments but should I be charged VAT on both?

If you look at the breakdown of your PPI redress, you'll see that you received a full refund of all PPI you paid (not taxed) along with 8% simple interest (which was taxed, but not VAT..it was Income Tax)

If you then look at the bill from the claim company you employed and you'll see that they charged a maximum of 25% of your gross redress plus Value Added Tax (VAT). 

So while it's true that you've been taxed twice, they are not the same tax. 

It's also possible, depending on your personal circumstances,  that you are entitled to claim some of the Income Tax you paid back from HMRC.

 The VAT you paid for employing the claims company is not recoverable, however. 

I hope that makes the situation clearer.