The Court of Appeal rejected the claim from Regency Factors plc against the VAT assessment of £164,932 from HMRC, agreeing with the Upper Tribunal’s decision that the taxpayer could not make a bad debt relief claim if it did not maintain a single refund for bad debts account.

Regency Factors is a debt factoring company that provides invoice factoring services and operates a factoring current account (FCA) for each client, but does not allocate funds against particular invoices.