New Forest

Tribunal Rules on Disbursements

The implications for Solicitors is likely to be significant. The Tribunal even sought submissions from the Law Society on the issue, which should raise some eyebrows.

The EU Principal VAT Directive, article 79, includes this provision:

The taxable amount shall not include the following factors:

(c) amounts received by a taxable person from the customer, as repayment of expenditure
incurred in the name and on behalf of the customer, and entered in his books in a suspense
account.

The taxable person must furnish proof of the actual amount of the expenditure referred to in point
(c) of the first paragraph and may not deduct any VAT which may have been charged.

Put most simply, if the adviser purchases a train ticket for him/herself, it is part of the cost of providing the service. If the adviser purchases a train ticket for his/her client to travel, it is a disbursement.

For further information on rules for disbursements, please contact Alan Rolfe on 023 8046 1200.

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