We hope that you have all managed to have a good summer. Life finally seems to be going back to normal, well a new normal! Our team are still in working bubbles with a mix of being in the office and working from home, which does seem to be the way forward to help protect us against a covid outbreak and also give our staff a new work life balance. Please read on as we have a few important industry updates to tell you about as well as the new court fees taking effect from 30th September 2021.
High Court Enforcement Agents (HCEA) VAT
From Monday 2nd August there has been a change in the application of VAT on Enforcement fees.
The HCEA issued fresh guidance in June, which provides that VAT should now be charged to the judgment creditor, where they are VAT registered. The position is currently unchanged where the judgment creditor is not VAT registered, or is unable to recover the VAT, where a sum equivalent to the VAT can be recovered from the judgment debtor.
We have agreed with the HCEAs that they will invoice us directly for the VAT and we will pay and recover this on your behalf. Your invoices from us will therefore be unaffected by this change. Your debtors will be better off by not having to pay the HCEA’s VAT, which we hope will then mean a slightly higher remittance from the HCEA in respect of the VAT not deducted.
Case example;
Debtor pays HCEA £1000. HCEA charges £100 + VAT of £20. They invoice us for the £20 VAT, which we pay and then recover on our VAT return so a nil cost exercise for us. They remit the amount net of their charges to us – this would have previously been £1000 – £120 = £880, but now will be £1000 – £100 = £900.
HCEA Creation of Enforcement Conduct Authority
The establishment of an Enforcement Conduct Authority (ECA) has been announced in a report published by the Centre for Social Justice recently. The enforcement and debt advice sectors worked collaboratively with the Centre for Social Justice to agree a framework for independent oversight of enforcement.
The Enforcement Conduct Authority will be up and running this year, and its objectives will be to:
- Raise standards;
- Improve accountability;
- Adjudicate complaints;
- Recognise vulnerability;
- Achieve fairness.
HCEA Cases – Reminder
Where the HCEA is instructed, Clients should never take a payment or payment in full from their customer without checking with LRC first. This is due to fact that once the HCEA are instructed they will collect all of their costs from the customer and if you take payment you will then be liable for the HCEA costs. Please ask Client Services if you need any more help or information on this.
Increase to Court fees
The Ministry of Justice UK has published its response to the consultation on increasing selected court fees and Help with Fees income thresholds by inflation.
The Government has analysed the responses to the consultation and considered the impact of policy proposals in light of recurring themes raised by some of the respondents.
The Statutory Instrument to effect these changes will shortly be laid before Parliament and the changes will come into effect on 30 September 2021.
We will be updating your fee scales in due course.
Winding up Petitions & Stat Demands
The UK government has introduced a further temporary measure in relation to liquidation petitions which is the Corporate Insolvency and Governance Act 2020 (Coronavirus) (Extension of the Relevant Period) Regulations 2020.
From 1st October 2021 to 31st of March 2022, a creditor will be able to present a petition to wind up a debtor only if certain conditions are met. The main criteria are:
(1) The debt must be at least worth £10,000;
(2) The creditor must have allowed the debtor at least 21 days to put forward proposals for repayment; and
(3) The debt must not be in respect of rent or other sum payable by a tenant under a lease.
This measure which is temporary until 31 March 2022 allows breathing space for companies who owe rent arrears and those who might otherwise have faced winding up proceedings in respect of relatively minor sums.
Breathing Space Update
The money advisor guidance and creditor guidance have been updated, please click on the link to view the summary of the updates made.
FCA Q&A on vulnerable customers
The FCA has published a set of frequently asked questions in relation to its guidance on the fair treatment of vulnerable customers.
The FAQs cover a range of areas including communications, customer service and staff skills and capabilities.
The FAQs document is available here .
LRC Updated Glossary of Services
We have updated our glossary of services, please click on the link to view.
We no longer offer the Personal Financial Statement Visits (PFS)/Financial Information Gathering Visits (FIG) doorstep visits, but we do still offer tracing and mini and full asset trace reporting. Please ask the Client Services Team for more information on these.
LRC Glossary of Services
Contact
Please do not hesitate to contact client services with any concerns or questions or if you need any training on the debt recovery process or our online portal “Debt Manager”.
When emailing the office, please use the team email addresses rather than (or as well as) individual ones, just to ensure that your email gets dealt with swiftly if the member of staff you are emailing is not available.
- Legal: legalteam@legalrecoveries.com
- Pre Legal: recoveriesteam@legalrecoveries.com
- Client Services: clientservices@legalrecoveries.com
- Finance: finance@legalrecoveries.com
- IT: it@legalrecoveries.com
We will endeavour to keep you updated with any significant changes. Please do not hesitate to contact client services with any concerns.
