For many years those working in the debt management industry and the individual voluntary arrangement (IVA) industry have wondered why their services had different VAT treatment.
The industries are very similar. Some operators in both markets are in common ownership and use similar software and call centres to help customers deal with their debts.
The fact that IVAs lead to a reduction in debt – unlike debt management which more normally involves debt forbearance rather than debt reduction – made it particularly perverse that the provision of an IVA was not treated by HMRC as a ‘negotiation ... concerning debts’ while a Debt Management Plan was.
If they were to have different treatment the...
