Payments company Allpay has taken Her Majesty’s Revenue and Customs (HMRC) to court over a recent ruling, when HMRC told the company it would have to collect VAT from all its clients from October 2011 to December 2015.

Housing associations have already begun to pay the charges, which will be issued monthly over the next four years. The first payment was taken out at the beginning of October. According to one estimate, this could cost some of Allpay’s larger housing association clients between £200,000 and £300,000.

Associations have been paying VAT on their bill payments since December 2015, when an HMRC ruling made it compulsory. Allpay is challenging this ruling, and so if it is successful, not only will associations avoid paying backdated VAT, but they will receive a refund of all the VAT collected since December 2015.