Revenue and Customs Brief 6 (2020) VAT treatment of property search fees charged
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Revenue and Customs Brief 6 (2020) VAT treatment of property search fees charged by solicitors and conveyancers
Published 5 June 2020
Purpose of this brief
This brief announces the withdrawal of the postal concession from 1
Who needs to read this
Solicitors and conveyancers who obtain property searches by post.
This announcement does not affect the VAT liability of the charges
made by local authorities or HM Land Registry for undertaking the
The ‘postal concession’ was informally agreed between
HMRC and the legal profession in 1991. It allows solicitors and
conveyancers not to charge VAT on fees for property searches conducted
by post, even though not meeting all the disbursement conditions set
out in section 25.1.1 of HMRC’s VAT
The First-tier Tribunal decision in Brabners LLP (2017) TC 06093,
agreed with HMRC that electronic (online) search fees were not
disbursements. Allowing postal search fees to continue to be treated as
VAT disbursements in all cases is inconsistent with that decision. For
example, where the solicitor or conveyancer uses the search results in
making their own supply of professional services, and so it is a cost
component of that supply, rather than a disbursement.
withdrawal of concession
HMRC engaged with key professional bodies to better understand their
views on the Brabners decision and the postal concession.
We understand that due to changing industry practices, it is more
than likely that postal searches have become obsolete and are rarely
used. The concession has also caused confusion on the correct treatment
of payments as disbursements. This is because it does not align with
HMRC’s policy on the VAT treatment of electronic searches. The
concession has no basis in law.
Withdrawal of the concession is necessary so that the VAT treatment
of property searches is correct and consistent.
The concession will be formally withdrawn on 1 December 2020.
HMRC will then publish revised guidance on VAT disbursements to
ensure consistency and provide clarity.
About the Author
© Crown Copyright 2020.
A licence is needed to reproduce this article and has been republished
for educational / informational purposes only. Article reproduced by
permission of HM Revenue & Customs.
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Article Published/Sorted/Amended on Scopulus 2020-06-05 19:54:43 in Tax Articles