The Law Society has released interim guidance to help firms manage the uncertainty created around VAT on electronic property searches by the First-tier Tribunal decision in Brabners LLP v HMRC Commissioners last year
The Tribunal found in Brabners that the amount paid by the client (in respect of electronic property search fees) formed part of the overall consideration they paid for the service provided by the firm. As a result, the Tribunal held that the fees for those searches could not be treated as disbursements for VAT purposes.
The result of the judgment in Brabners is that there are now different approaches to VAT treatment depending on the method used to obtain the search.
We have been in contact with HMRC to seek clarity on this matter, and have created some advice for law firms in the meantime.
We are keen to hear from you if your firm is approached by HMRC in relation to the VAT treatment of historic searches, particularly if your firm’s standard practice is to pass on the search (or a copy of the search) to the client. Please contact us at firstname.lastname@example.org.