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HMRC internal manual

Debt Management and Banking Manual

Enforcement action: distraint: costs and accounting: VAT and distraint costs

A company or a person who carries on a business (or separate businesses) with an aggregate taxable turnover of more than a certain limit is required to register with HMRC for VAT purposes, as a `taxable person’. This turnover amount has tended to increase in successive Finance Acts so if you need to know the exact amount you should contact your nearest VAT Contact Centre office for the information.

If the bailiff or auctioneer is not a `taxable person’, no VAT is payable on the fees paid to them.

VAT on levy and possession costs

Where you have carried out the levy without using a bailiff, you should not add VAT to levy and possession costs.

In bailiff cases, if the bailiff is a ‘taxable person’

  • add VAT to the levy and possession costs at the current rate when paying the bailiff (DMBM656340), but
  • do not charge the VAT to the defaulter.

VAT on setting up fees

If you pay a setting up fee when you refer a case to an auctioneer (only payable where he was not present at the levy)

  • add VAT to the setting up fee at the current rate.

The setting up fee is not chargeable to the defaulter.

VAT on removal, appraisal and sale costs

In all cases, if removal, appraisal or sale is necessary

  • pay any VAT due on the appraiser’s or auctioneer’s fees where they are a ‘taxable person’ and
  • recover the VAT with the costs from the defaulter.