beta This part of GOV.UK is being rebuilt – find out what beta means

HMRC internal manual

VAT Time of supply

Tax points for specific categories of supplier: solicitors: adjustments to fees


In certain circumstances a solicitor’s fees can be subject to third party scrutiny and adjustment before acceptance. The circumstances in which this can occur and the tax point consequences depend on the type of work involved.

The losing party to the legal action may be ordered to pay costs. Where this is the case, the solicitor for the successful party prepares a bill which is then either agreed with the solicitor for the loser, or is referred to the Court for scrutiny under the taxation procedures. Settling of the costs in these circumstances is part and parcel of the solicitor’s overall supply to the client. A basic tax point does not therefore occur until either the costs have been agreed between the solicitors or the taxation procedure is complete.

Clients can challenge the level of fees charged by a solicitor. In England and Wales this is a function of the Legal Ombudsman. Different arrangements apply in Scotland and Northern Ireland. Details can be found on the Law Society of Scotland and Law Society of Northern Ireland websites respectively. Any activity undertaken by a solicitor under these arrangements does not form part of the supply by the solicitor to the client. The basic tax point will have occurred when all the work for the client, except the invoicing, was completed. Where this has resulted in tax being accounted for in advance of a reduction to the bill, the solicitor may subsequently adjust the amount accounted for subject to the normal rules regarding credits.

See VATTOS8560