DWF have recently defended a case where a Plaintiff disputed the fact the defence insurer refused to pay the Plaintiff's VAT on a claim where the Plaintiff was fully VAT registered and had means to recover the appropriate sum from HMRC.
Parties differed in their views, with the Plaintiff's Solicitor seeking to obtain a court direction that where their client is VAT registered, they should not have to seek VAT payment from them and this should be the responsibility of the insurer.
There are multiple issues that arise from this, the most obvious being that insurers cannot police a case once a decree is made. There is also a real risk of unjust enrichment.
The court agreed with the Defendant to maintain the status quo. A decision was made that the Defence insurer should not pay the VAT element of a claim when a Plaintiff has a means to recover the VAT element via HMRC.
This decision is now subject to appeal. In the interim, we would encourage clients to preserve the usual method of dealing with these cases.
Parties differed in their views, with the Plaintiff's Solicitor seeking to obtain a court direction that where their client is VAT registered, they should not have to seek VAT payment from them and this should be the responsibility of the insurer.
There are multiple issues that arise from this, the most obvious being that insurers cannot police a case once a decree is made. There is also a real risk of unjust enrichment.
The court agreed with the Defendant to maintain the status quo. A decision was made that the Defence insurer should not pay the VAT element of a claim when a Plaintiff has a means to recover the VAT element via HMRC.
This decision is now subject to appeal. In the interim, we would encourage clients to preserve the usual method of dealing with these cases.
