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HMRC internal manual

VAT Government and Public Bodies

Government departments and health authorities: Contracted Out Services (COS) Headings: COS Heading 52 - Professional advice or opinion on departmental efficiency or policy issues, legal advice or opinion and internal audit

Note: This heading is currently under review with HM Treasury. Government departments and NHS bodies should continue to use the guidance detailed below until further details are provided by HMRC.

Government departments

The wording of this heading was amended in 2008. It used to read “Professional services, including those of any manager, adviser, expert, specialist or consultant”, but the change clarified that the scope of recovery under the heading is confined to provision of advice or information on departmental efficiency, policy development, legal advice or opinion and internal audit.


  • Internal audit reports.
  • Legal opinions from solicitors.
  • Hire of consultants to provide advice on efficiency issues or comment on the viability of new departmental initiatives.


  • The hire of a consultant to work as part of the Department.
  • Research - this is covered by Headings 20, 58, 59, 66 or 74.
  • The service of actually putting something into effect, as opposed to merely advising on a matter. For example, the services of a professional who is brought in to advise on AND then implement a new initiative.
  • Staff secondments - because this involved contracting in staff to work alongside.
  • Specialist staff hired to provide “holiday/ maternity cover” for key staff members.
  • Hire of accountants to carry out tax health checks.

Additional information

HM Treasury wrote to Government Departments on the 14 April 2014 about Shared Service Arrangements and refunds under this heading for Non-Criminal Legal Services. In so far as the Treasury directs HMRC in individual cases, VAT can also be recovered on other non-criminal legal services. There have so far been no such directions.

NHS bodies

VAT is recoverable on the professional services of managers, advisers, experts, specialists and consultants in providing advice or information on how to put something into effect.  The eligible services are therefore of an advising nature, rather than of implementing a change, taking action following a recommendation, etc. In relation to building works and construction, the professional fees of architects and structural engineers are included, as is consultancy advice on planning site layouts and the services of solicitors, valuers and surveyors.  VAT is eligible for a refund irrespective of whether the fees relate to repairs and maintenance or new construction or improvements or refurbishment etc.

This category is not restricted to professional fees in connection with construction work.  It also covers professional fees such as those in connection with computer consultancy work, including contract software development.