VAT on disbursements

nookie

Hi,

I can't remember, but if a VAT registered company invoices me (as a non-VAT registered individual) should they be charging VAT on the disbursements.

I'm sure they shouldn't. I'm asking as the bank transfer fee on my completion statement had VAT charged.

Thanks

Timmne

Yes they should - it's irrelevant whether you're VAT registered; you're paying for a VATable good/service so you pay VAT on it....

Similar to a new car, chocolate, accountants etc!!

Timmne

Although on second read, I'm sure bank transfer fees don't attract VAT, unless they reckon it's a service, in which case I suppose it would....

cash99

There are very specific rules on treating items as disbursements, unfortunatley bank transfer charges cannot be treated that way. This means you pay vat on bank charges through your solicitor, which would have been vat free if you had paid the bank directly.

More info on HMRC website under the Vat guide.

http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_ShowContent&id=HMCE_CL_001542&propertyType=document#P20_1131



Example 1:

A solicitor pays a fee to a bank for the transfer of funds telegraphically or electronically to, or from, the solicitor’s own business or client account.


VAT treatment:

The solicitor cannot treat the bank’s fee as a disbursement for VAT purposes. The service for which the charge is made is supplied by the bank to the solicitor rather than to the client. Although the bank’s supply may be exempt from VAT, the fee when re-charged, even though at cost, is part of the value of the solicitor’s own supply of legal services to the client and VAT is due on the full amount.