Amendment to the Practice Direction on Costs in Criminal Proceedings (Value Added Tax on Disbursements) [2007] All ER (D) 13 (Dec)
This amends Pt XIV (Disbursements) of the Practice Direction on Costs in Criminal Proceedings. The new Pt XIV.6 provides that the question of whether legal representatives should include VAT in respect of payments made to third parties for the supply of goods and services where no VAT was chargeable on the supply by the third party, should be decided in accordance with the criteria set out in the VAT guide (HM Customs & Excise Notice 700).
Payments to third parties normally treated as part of the legal representative’s overheads, eg postage and telephone costs, would not be treated as disbursements. The third party supply should be included as part of the costs of the legal representative’s legal services and VAT must be added to the total bill charged to the client.
Some payments, although correctly described as disbursements for some purposes, are not classified as disbursements for VAT purposes, and have to be shown as part of the services provided by the legal representative and VAT added in respect of them, whether or not VAT is chargeable on the supply by the third party.
