Disbursements and the treatment of VAT

9th October 2017 by Fiona Hotston Moore

A recent First Tier Tax Tribunal (FTT) case involving Brabners LLP, a conveyancing firm, has highlighted a possible risk regarding the VAT treatment of disbursements for Professional services firms including lawyers, accountants as well as conveyancing firms.

As part of offering conveyancing services, Brabners were also obtaining, on behalf of their clients, local authority and local land charge ‘searches’.  To do this they tended to use Searchflow, an online search agency, and they treated the fees paid to Searchflow as disbursements, invoicing their clients without VAT.

At the tribunal hearing, HMRC maintained that the ‘search’ fees constituted an integral part of Brabners’ charges as the information that they contained had been used by the firm to provide advice to their clients and therefore should include VAT.  Brabners raised an appeal on the basis that they always prepared a separate report for their clients regarding the search results, however, this was rejected by the tribunal.

Obviously, FTT cases are only binding on the parties specifically involved, however, anyone charging VAT free disbursements should be aware of this ruling and if in any doubt about the VAT treatment of disbursements should seek further advice.

If you would like to discuss this matter further please contact Fiona Hotston Moore.


Fiona Hotston Moore

Fiona Hotston Moore

« Back to blog