Update on the VAT treatment of electronic searches

Following on from our earlier post on this matter (here), the Law Society met with HM Revenue & Customs and has now released interim guidance on how HMRC intends to approach the VAT treatment of electronic property searches.

HMRC has confirmed that they do not intend to change the approach set out in their published guidance as to whether a property search fee should be treated as a disbursement for VAT purposes; if the search is passed on to the client without comment or analysis, HMRC states that the fee may be treated as a disbursement. However, if the firm uses the search itself, for example in providing advice or drafting a report, HMRC’s view is that the fee will form part of the charges for its services and will therefore be subject to VAT.

Please note that this is interim guidance only and we await HMRC’s final view. In the meantime, due to its wide-reaching affect on most (if not all) law firms, we advise clients within the legal sector to get in touch with us if any further information on VAT and disbursements is required. With Making VAT Digital on the horizon it’s a good example of why VAT accounting systems should be reviewed to ensure the correct VAT coding on costs and income is being applied.

Centurion VAT offer an independent and expert source for VAT advice. Based in Wales we work across the UK and have overseas clients who need VAT advice and support when setting up in the UK.

VAT advice for organisations who find themselves at an unfortunate juncture with UK VAT for whatever reason, is where we help out. VAT sensitive sectors such as Universities, Further Education Colleges, Housing Associations, Charities and Corporate businesses where VAT can be a real cost are where we specialise. Exporters under challenge from HMRC on Export Evidence; a property development where VAT exempt activities are complex; a Local Authority or a Leisure or Cultural Trust – whatever your sector, when you need to get expert VAT advice Centurion is where you’ll find it.

An award winning VAT team is what you’ll find at Centurion – evidence of the quality of our VAT advice and service can be showed by our long term retention of clients. Whatever your VAT issue – BREXIT, Making VAT Digital, Partial Exemption or Property then do make contact with a call or email emailus@centurionvat.com

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