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HMRC withdraws concession for VAT disbursements treatment of property searches obtained by post

HM Revenue and Customs (HMRC) announced on 5 June 2020 that the VAT ‘postal concession’ will be formally withdrawn on 1 December 2020.

The postal concession allows solicitors to treat fees for local authority searches obtained by post as disbursements for VAT purposes, meaning VAT is not payable on the recharge of the fee to their client.

In withdrawing the concession, HMRC states that allowing fees for postal searches (which are now very uncommon) to continue to be treated as VAT disbursements in all cases is inconsistent with the decision in Brabners.

HMRC also states that it will publish revised guidance on VAT disbursements to ensure consistency and provide clarity.

Read more about the Brabners case and the VAT treatment of disbursements

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