The client to whom you provided the legal services is not the associate company.
A VAT invoice can only be provided to the client who actually received the supply of the legal services to which it relates.
If it is to be paid by a third party, the words "payable by [name of third party]" should be stated on the invoice, in addition to the client's name and address.
For UK clients, VAT will be chargeable on your legal services. If that client is VAT registered, they will be able to claim the VAT element back from HMRC.
In these circumstances, the client should only recover the net amount of the fees from the third party.
If the client is unable to reclaim the VAT on the tax invoice as input tax (for example, the client is not VAT registered), the third party will need to pay the full invoice, but will be unable to reclaim VAT, as it did not receive the supply of services.
Caution should be exercised if you are asked to issue an invoice to an overseas party, who is not your client, so that VAT is not charged.
HMRC may view this and seek VAT that you should have charged.
For more information, see Part III, s13 and s14 of the Value Added Tax Regulations 1995 or contact the Practice Advice Service.
Disclaimer: While every effort has been made to ensure the accuracy of the information in this article, it does not constitute legal advice and cannot be relied upon as such. The Law Society does not accept any responsibility for liabilities arising as a result of reliance upon the information given.
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