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. 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?
#2. 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?
#3. 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:
#4. You are acting for a client whose place of belonging is Guernsey and they are making a claim through the UK courts against a water provider for damages on a London property arising from water ingress which the client claims the provider is liable for.
When issuing a bill to the client, what VAT rate do you apply to your supply?
#5. You pay the firm’s practising certificates from the business account.
When posting the transaction, What VAT rate should you select when posting the payment to the accounting system?
#6. What is the name given to the VAT that is due on your taxable supplies i.e your fees/expenses and vatable disbursements?
#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’re acting for an asylum seeker where the client’s right to remain has not yet been granted. The client has now been arrested and is in a UK prison.
When issuing your bill to the client for the immigration work, your services are:
#9. 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?
#10. 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:
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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