VAT on Solicitor's Telegraphic Transfer fees?

Trying_to_be_good

I realise that against all the other costs of buying and selling this is a small cost, but is it usual/necessary for solicitor's to add VAT to the already high telegraphic transfer fees they charge for moving money to redeem the old mortgage, to the seller's solicitor, and to transfer any excess back to me?

My solicitor is quoting £35 plus £7 VAT so £42 for each transaction, and I don't remember the VAT element from my last sale/purchase. I think the TT fee was only £25 for each transfer, too.

Thanks, and Happy New Year

ACG

I dont think you pay vat on anything other than their fee.
Going off the quotes my solicitor gives out, the TT fee does not have vat (its £24). Although dont forget, business banking is more expensive so their fees may not be inflated.

dunstonh

CHAPs payments are not vatable. The solicitor is not charged VAT on the CHAPs payment. So, it should not be passed on to you.

CHAPs payments tend to be around £25. It is probable that the solicitor is adding a margin to it to cover work they need to do in preparing the CHAPS payment.

Trying_to_be_good

Thanks for the replies, I'll check back with the solicitor as the draft completion statements both include VAT on the transfer charges.

BabyBoots

I was quoted VAT on telegraphic transfers by all 4 solicitors that I went to for quotes. The initial transfer fee varied from £25 to £32.

I just added up total costs for each solicitor - all fees, searches etc, inc VAT and went with the cheapest. Some were cheaper on some elements, but more expensive on others. There wasn't much in it overall!

Did it have VAT on transfers on your quote?

jjlandlord

The question is not whether the bank charges VAT on the CHAPS transfer to the solicitor.

The solicitor is charging £35 to perform the transfer, which is a service and includes his time and whatever fees the bank charges him.

If he is registered for VAT then he must charge you VAT on his fee.

Trying_to_be_good

Thanks for your reply, I have a quote for the solicitor's work so would hope that includes all the expected elements of her work, and don't pay VAT on the disbursements and search fees etc, so will ask specifically about the transfer fees.

Armorica

Banks don't charge VAT for transaction fees. Banking services/transactions aren't VAT-able. Advisory fees are.

(But in the grand scheme of things, if your solicitor insists, you'll end up paying because the sum is small relative to the cost of the house etc.)

JasonLVC

Armorica wrote: »

Banks don't charge VAT for transaction fees. Banking services/transactions aren't VAT-able. Advisory fees are.

(But in the grand scheme of things, if your solicitor insists, you'll end up paying because the sum is small relative to the cost of the house etc.)

Banks don't charge VAT, but the contract here is between customer and the solicitor. A solicitor is not a bank (obvious I know but bear with me!)

http://www.hmrc.gov.uk/manuals/vtaxpermanual/vtaxper46000.htm

Most costs in a house purchase can be treated as a disbursement (no VAT), but not CHAPS.

"the following charges are not eligible to be treated as disbursements.

• Charges from third parties which were actually incurred for the solicitor’s own purposes These include telegraphic transfer fees or CHAPS which represent a charge by the bank to the solicitor for the service of transferring money out of the solicitor’s bank account."

So, here VAT applies because the charge is from bank to solicitor and so solicitor has to recharge this, all recharges are VATable unless they are disbursements....which this isn't. I do agree though that this is a very technical and subtle point/difference. the average customer will not understand.

Thrugelmir

Armorica wrote: »

(But in the grand scheme of things, if your solicitor insists, you'll end up paying because the sum is small relative to the cost of the house etc.)

More likely the HMRC has picked up on this and conveyancers now find it easier to simply just charge VAT on the service.