Guidance on the charging of VAT on bills issued to clients can be obtained from Information Leaflet No 15/01 (VAT and Solicitors) issued by the Revenue Commissioners in November 2001.
Sections 7 and 8 deal specifically with rates of VAT and Taxable amount.
Rates of VAT
Almost all services supplied by solicitors are liable to VAT at 21 per cent. The principal exceptions are the following:
(a) collection of insurance premiums Exempt
(b) letting of solicitor’s own premises (short-term) Exempt
(c) services connected with property situated outside the State 0 per cent
(d) Fourth Schedule services 0 per cent
(e) Directors’ fees, commissioner for oath fees,
Notary Public fees not taxable
Taxable Amount
The amount on which a solicitor is liable, and the amount by reference to which a solicitor is or is not obliged to register, is the amount of his /her professional fees together with “all taxes (other than VAT), commissions, costs and charges whatsoever” which the solicitor is entitled to receive in respect of or in relation to the supply of his /her services.
Outlays paid by a solicitor on behalf of a client are not regarded as part of the solicitor's charges and are not, therefore, taxable.
Expenses incurred by a solicitor in the course of, and for the purposes of, carrying out his/her professional services are regarded as part of the solicitor’s charges and are taxable.
Those outlays which are not liable to VAT in the hands of a solicitor include:
• Advertising
• Company Registration, etc. Fees including Company Seals Counsels’ Fees (see note in paragraph 8.2)
• Court Fees and Fines
• Deposits (such as house deposits paid by clients)
• Land Registry Fees
• Photographs of Court Exhibits
• Registration of Deeds Fees
• Search Fees
• Stamp Duty and other duties and taxes Surveyors’ and Estate Agents’ Fees
• Valuation Services (by actuaries and Valuation Office)
• Witnesses’ Fees and Expenses.
Where it is practicable for these outlays to be invoiced direct by the supplier to the client (although transmitted through the solicitor) the solicitor would be involved hardly at all but it is most important for the solicitor to ensure that all invoices relating to such transactions are in the name of the client.
If they are not, the client, if s/he is a VAT-registered person and there is an amount of VAT invoices, will not be entitled to a deduction for the tax. (NOTE re counsels’ fees: When counsel has received payment of fees s/he will issue to the instructing solicitor, at the solicitor's request, a combined VAT invoice/receipt drawn up in the name of the lay client).
Those expenses which are regarded as part of a solicitor’s charges for professional services and which are liable to VAT include:
• Courier Fees
• Hire of consultation rooms from Incorporated Law Society (exempt if charged out separately by solicitor)
• Hotel costs
• Photocopying
• Postage
• Summons serving fees
• Telephone
• Town agent fees
• Travelling costs.
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