VAT within Law Firms
Speaker: Darren Whelan
Length: 2.5 Hours
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?
VAT is a complex and ever changing tax. This online workshop is designed to focus on the areas that cause the most confusion and the areas that we see HMRC specifically target law firms during a VAT inspection.
This on demand workshop will explore the practical application of the VAT regulations to help you to be compliant. 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 discusses throughout the session.
Introduction
- Scope of VAT within the UK
Time of Supply
- Basic Tax Point
- Actual Tax Point
- Extensions
Sales/Fees
- Client’s overseas (Place of ‘belonging’)
- Land related services
Third Party Payers
- Indemnity basis
- VAT invoices
Disbursements and Recharges
- What is a disbursement (SRA and HMRC’s definition)
- Disbursements – accounting options
- Discretionary treatment of Counsel’s Fees
- Overseas experts
- Recharges – accounting options
- VAT invoices
- Search fees
- Medical records and reports
Administrative Aspects of VAT
- Valid VAT invoices
- Valid credit notes
- Recovery of input VAT
- Supplier invoices 6 months older or greater
- Subsistence, travel and staff entertainment expenses
- Mixed expenses (business and personal usage)
- Mobile phones
- VAT Returns
- Correcting errors
- Bad debt relief
#1. Your firm is acting for a client. The case is a criminal matter. The fee earner instructs a specialist to produce video copies of CCTV footage where the action is slowed down, hard copies of individual frames and enhanced/enlarged sections of images are produced. The cost of this service is being passed on to the client.
When billed, the cost is a:
#2. You’re acting for VAT registered business client in a litigation matter. Your services were provided to and used by your client. A third party has agreed to pay your client’s legal costs and you have issued the payer with a note of your costs requesting the full amount. The payer has stated that they’re liable for the net amount only and that your client should discharge the VAT amount.
Is the payer correct?
#3. Your firm is acting for a client in respect of a purchase of a residential property. The lawyer applies for an OS1 search direct from the Land Registry. The search result reveals that there has been alterations made to the register since the date the Official Copies were produced by way of a restriction. The lawyer advises the client on the results of the search.
When billed to the client, you would treat the cost as:
#4. You’re acting for the executors in dealing with the administration of a deceased person’s estate. The deceased was a British National and resided in the UK. However the executors and those you are corresponding with are based in Canada. There is UK property involved and it forms a significant portion of the estate along with UK based bank accounts.
When issuing the bill to the executors, is supply subject to standard rated VAT?
#5. In a non-contentious case, the VAT tax point will be the date of the invoice, provided the invoice is issued within how long after the work is completed?
#6. You instruct a medical reporting agency to obtain copy-medico legal documents on behalf of a client that has been involved in a road traffic accident.
Is this cost a disbursement for VAT purposes or a recharge?
#7. 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:
#8. You pay the window cleaner for cleaning the windows of your offices. They are not registered for VAT.
What VAT rate should you select when posting the invoice to the accounting system?
#9. You’re acting for client in a land dispute case where the client has taken action against a deceased’s estate to secure title to a property they own. The client’s place of belonging is the USA. The disputed land is the UK. You draft an invoice for £2,000.00.
What VAT rate do you apply to your supply?
#10. 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:
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.
No. In order to watch them, you must watch them whilst logged into the website.
