VAT on Solicitor invoice

JodieR

I've got an invoice from a solicitor which reads:

£900 Paid disbursements (barrister fees)
£400 Costs
£1300 Total net
£80 VAT (ie 20% of £400)
£1380 Total due

Attached to this invoice is the invoice from the barrister to the solicitor and this shows £750 + £150 Vat.

Does anyone know why the £150 VAT doesn't show on the invoice to my client? can he not include it on his VAT return?

Thanks

jamesm96

JodieR wrote: »

I've got an invoice from a solicitor which reads:

£900 Paid disbursements (barrister fees)
£400 Costs
£1300 Total net
£80 VAT (ie 20% of £400)
£1380 Total due

Attached to this invoice is the invoice from the barrister to the solicitor and this shows £750 + £150 Vat.

Does anyone know why the £150 VAT doesn't show on the invoice to my client? can he not include it on his VAT return?

Thanks

In this instance, no, the solicitor can't reclaim it. The Law Society (and HMRC) give Solicitors a choice in how they'll recharge disbursements, and one of those options is as above - to pass on the gross amount to the client, but the solicitor must not then reclaim the input VAT.

If you think about it, that makes sense; it makes the situation cost-neutral for the solicitor - they've paid out £900 gross to the Barrister and won't claim any VAT back, and they've received £900 gross from the client and won't pay any VAT to HMRC.

jamesm96

Sorry, just to add to the above, if your client is VAT registered then they can claim the input VAT; they've got a VAT invoice from the Barrister and they've paid the gross cost, so the input VAT is there to recover on the VAT return.

JodieR

Thanks Mike, I've just refreshed my memory on disbursements and I get it, but could my client claim the VAT on barristers fees as the barrister's invoice is made out to the solicitor rather than my client?

Or can my client request that the solicitors re-issue their invoice showing the barristers fee as a cost rather than a disbursment and include VAT? that way the solicitors would account for an extra £150 input and output vat on their return which wouldn't put them in a worse position?

jamesm96

JodieR wrote: »

Thanks Mike, I've just refreshed my memory on disbursements and I get it, but could my client claim the VAT on barristers fees as the barrister's invoice is made out to the solicitor rather than my client?

Or can my client request that the solicitors re-issue their invoice showing the barristers fee as a cost rather than a disbursment and include VAT? that way the solicitors would account for an extra £150 input and output vat on their return which wouldn't put them in a worse position?

I'll be honest, I'm not sure! I want to say yes; if the client is VAT registered and they've been passed a cost which (originally) has VAT on it, why shouldn't they be able to? But I can't find any guidance on it, and I feel like there'd be an issue with not having a 'proper' VAT invoice from the supplier. I'm stumped. I'll see what I can dig...

JodieR

Thanks Mike, I've filed the VAT return without claiming the VAT now to be on the safe side and left it with the client to ask the solicitor to re-issue their invoice. I'll let you know the outcome!

T.C.

My solicitor always issues an invoice showing which costs are plus VAT and which are exempt. You should be able to get a detailed invoice from them.