The Law Society has issued new guidance to help firms decide whether items may be treated as disbursements for VAT purposes.

The guidance sets out the changes in recent case law (such as British Airways v J. Prosser [2019] EWCA Civ 547) and considers what they mean for the profession.

It includes:

  • basic rules and practical examples
  • when payments / expenses can be treated as a disbursement for VAT purposes
  • how to treat qualifying disbursements
  • non-qualifying payments or expenses.

The guidance replaces our former practice note on VAT on disbursements. It does not aim to set standards for the profession.