HM Revenue and Customs (HMRC) has announced that the VAT ‘postal concession’ will be formally withdrawn on 1 December 2020.

The postal concession allows solicitors to treat fees for local authority searches obtained by post as disbursements for VAT purposes, meaning VAT is not payable on the recharge of the fee to their clients.

According to HMRC, allowing fees for postal searches (which are now very uncommon) to continue to be treated as VAT disbursements in all cases is inconsistent with the decision in Brabners.

HMRC plans to revise its guidance on this area.