Disbursements, Recharges & VAT
Speaker: Darren Whelan
Length: 45 Minutes
Published September 24, 2022
Last Updated on May 1, 2023
Who is this training for?
This on demand workshop is for Solicitors, Lawyers, Accountants, Compliance Officers, COFA’s, Legal Accounts Professionals, Legal Cashiers and anyone that has any involvement in working in legal finance and compliance.
Purpose of this training?
The decision reached in Brabners v The Commissioners of HMRC caused a lot confusion within the legal profession, resulting in conflicting and incorrect guidance provided by reporting accountants and training providers. Some of that guidance stated that firms should take the ‘risk adverse’ approach by charging VAT on the cost of all searches irrespective of circumstances in which they were incurred. This is not the correct application of the VAT regulations.
This on demand workshop focuses on the correct treatment of disbursements for VAT purposes and recharged overheads. The workshop will look at both HMRC’s and the SRA’s definition of disbursement and it will explore the VAT Act 1994, Notice 700, case law and address issues that have emerged from cases like the ‘Brabners’ decision and the implications of those decisions to law firms. Conundrums and scenarios will be posed and discussed throughout the session.
- Disbursement Definition (HMRC and SRA)
- Qualifying Payments
- Disbursement Accounting Methods (Agency and Principal)
- Medical Reports/Records
- Search Fees and Search Agencies
- VAT Invoices/Bills
- Counsel Fees
- Case Law
#1. You’re acting for a client whose place of belonging is Jersey. You have instructed a UK barrister on behalf of the client. The barrister has issued you with a VAT invoice addressed to your firm and has charged you £2,000 plus VAT.
When billed to the client, you would treat the cost as:
#2. A court fee has been paid from the business account, what VAT rate do you analyse the payment to when posting to the accounts system?
#3. Your firm is acting for a client and has instructed a translator to translate a document which needs to be produced in Court.
When including the cost of the translator in your bill of costs, you treat it as a:
#4. You have instructed an interpreter in order for your client to be able to communicate with you or to enable your client to understand Court proceedings. The cost of the interpreter is being passed on to the client. When billed, the cost is:
#5. Your firm is acting for a client and has instructed a process server to serve legal documents to a third party.
When including the cost of the process server in your bill of costs, you treat it as a:
Further Information
Accounts & Finance Practice Notes (Subscriber only resource)
Compli-Q – Compliance FAQs (Subscriber only resource)
Disbursement or Recharge Calculator (Subscriber only resource)
Practice notes and training sessions represent the Association of Legal Compliance & Accounts’ view of good practice in a particular area. They are not intended to be the only standard of good practice that firms can follow.
Practice notes and training sessions are not legal advice, and do not necessarily provide a defence to complaints of misconduct or poor service. While we have taken care to ensure that they are accurate, up to date and useful, we will not accept any legal liability in relation to them.
Frequently Asked Questions
It’s really simple:
- Reduced cost
- Can be watched anywhere, anytime on any device – no travel time or cost
- Shorter and more efficient than face-to-face
- Recorded and can be replayed at your leisure
Online – the Cons
On Demand is not for everyone one. People learn differently and watching a pre-recorded training video can feel very lonely and isolated. It requires strong, self-motivation and time management skills. There is no opportunity to ask a question and receive an answer straight away as you would with an online or a face-to-face workshop.
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