LSC dithers over VAT muddle on fixed fees

VAT is included in the police station fixed fees due to start on Monday, the Legal Services Commission (LSC) says—despite assurances to the contrary it gave just last week.

The LSC training materials and written papers prepared for software suppliers stated that all the figures previously quoted for police station fixed fees were inclusive of VAT.

However, Andrew Keogh, vice chair of the Criminal Law Solicitors’ Association (CLSA) and a partner at Tuckers solicitors, says confusion arose after they were inserted into the January 2008 contract at the same rate, suggesting VAT can be applied on top. All other contract rates are VAT exclusive, which added to the muddle.

After the CLSA raised the issue, the Law Society’s lawyers sought clarification from the LSC.

According to a statement on the society’s website, Justinia Lewis, acting head of procurement and contract advice in the LSC’s corporate legal team, replied last week: “We confirm that VAT is claimable in addition to the fees set out in Part E of the Specification. This right is set out at Clause 12 A.6 of the Contract Standard Terms.”

However, the LSC this week changed its mind again.
An LSC spokesperson says: “We can confirm that VAT is included in the published police station fixed fees due to start next Monday. Our website, training to providers and material prepared for software providers have all been consistent on this point and it was clearly flagged in the policy consultation exercise.”

Keogh says: “There has never been clarity on the VAT issue, and on the basis of previous dealings practitioners properly assumed the figures to be on the basis of all other figures in the contract, VAT exclusive. I believe the LSC is trying to escape from paying over £30m in VAT to suppliers and firms should call upon the Law Society to bring an immediate legal challenge.”
Law Society president Andrew Holroyd says: “The problem is symptomatic of the LSC setting a rushed timetable that it cannot meet, of producing ‘cut and paste’ contracts that contain major errors such as this and of failing to work collaboratively with the Law Society which would have prevented such obvious mistakes happening at the last minute.”