Regency Factors PLC (appellant) -v- Her Majesty’s Revenue & Customs

Thursday 27 January 2022

Regency Factors PLC (`Regency’), seeks permission to appeal the Upper Tribunal order of Bacon J and Cannan J dated 14 December 2020 by which the UT dismissed its appeal against the decision of the First Tier Tribunal.

Regency provides a factoring service to its client and in consideration for that service it is paid certain fees. VAT invoices for those fees are issued to clients when the invoices are assigned to Regency for collection. Regency contends that it is entitled to bad debt relief on the VAT element of the fees that were unpaid by its client.

HMRC rejected claims to Bad Debt Relief made by Regency on its VAT returns for various accounting periods between July 2007 and January 2010, claiming that Regency was not entitled to bad debt relief because the consideration for the supply was received by Regency and there was no bad debt to write off. Further, that Regency did not in any event comply with the requirements of Regulation 168 of the VAT Regulations 1995.

The First Tier Tribunal dismissed Regency’s appeal against HMRC’s VAT assessments on 28 February 2019. With permission, Regency appealed to the UT. The UT considered that the FTT was wrong to find that consideration for the supplies was received by Regency at the time it made the Initial Advance to its client but dismissed the appeal on the basis that the company did not keep its records in a single account which is required by Regulation 168(3) of the VAT regulations 1995 (SI 1995/2518).

View hearing:

Part 1

Part 2