LEGAL
Brent Goodwin
Uncertainty for solicitors after legal ruling on digital searches
Solicitors are being warned by experienced accountants Newby Castleman about the potential consequences of a legal ruling which may see firms having to charge VAT on digital searches carried out on behalf of their clients. Many law firms treat
electronic local authority searches and other such searches, commonly undertaken on behalf of clients looking to purchase property, as disbursements, meaning they do not charge VAT on the cost of the search when billing their clients for the work. In the First-tier Tax Tribunal
The new MOT test will include stricter safety checks
time of the last MOT then there is potentially evidence to hold that person accountable. There will also be stricter rules
on diesel emissions introduced to help crack down on air pollution and also additional safety checks will be carried out during the MOT – such as underinflated tyres, fluid leaks or reversing lights. The changes will make it harder for vehicles, especially diesel, to pass the test but it is anticipated that these tougher regulations will improve air pollution and make roads safer for motorists. However, I would encourage all
drivers to fully understand the system and if your vehicle passes with a minor you should seriously consider repairing the fault in case it causes an accident later down the line. The cost of repairing an old brake pad will be minimal in comparison to the cost incurred from an accident deemed your fault.
of Brabners LLP versus HMRC however, this practice was challenged, as HMRC successfully argued that such fees were not repayments of costs incurred on behalf of customers, but that the information was used by the solicitor to give advice to its clients, making the costs subject to VAT as part of solicitors’ fees. Brent Goodwin, VAT Manager at Newby Castleman, said: “HMRC has effectively ripped up a long-standing concession on allowing postal property searches to be treated as disbursements, for although this agreement remains in place most firms have moved away from this traditional format to the digital alternative. “The tribunal’s decision could
have major consequences for smaller firms of solicitors in particular. Any change may impact solicitors’ current and future billing arrangements, and might even have a bearing on disbursements from already settled accounts from as far back as four years ago, meaning lawyers will have to either meet this cost themselves or look to collect VAT from their clients retrospectively.”
business network July/August 2018 65
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