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HMRC internal manual

VAT Valuation Manual

Specific applications: Solicitors and other professionals: disbursements

Solicitors and disbursements

Where a solicitor incurs accommodation and/or travelling expenses in the course of a taxable supply of legal services to a client, the charge made to the client for such expenses is part of the consideration for the supply of those services and must be included in the value for VAT.

However, in some cases, clients may provide at their own expense the accommodation and/or transport necessary for the performance of a solicitor’s services. In such cases the cost of these items will not be included in any account rendered by the solicitor. In such circumstances, although it is arguable that the charge made by the solicitor is not the whole consideration for the taxable supply, it has been agreed with the Law Society that Customs will not seek to include the value of these items as part of the consideration for that supply.

This agreement also extends to the situation where a solicitor has his client’s authority to use money being held for the client to obtain such incidentals of transport and/or accommodation. The basis for this treatment is that, in practice, there is little difference between the client paying for the transport etc. directly himself, or giving the solicitor the money to pay for the transport, or authorising the solicitor to take the money to obtain the transport from monies that the solicitor is holding for him.

The agreement was made in the particular context of legal services, where there is a statutory requirement for solicitors’ accounts to their clients to show “disbursements” separately. The same principle does not apply where services are supplied by other professional persons who are required to account for VAT on such amounts.