VAT Accounting For Solicitors

Law practices and solicitors firms generally expect to charge and account for VAT on all supplies made to UK clients, and some based overseas depending on the service. However, there are circumstances when VAT may not be due, one of which is the making of an exempt supply – such as receiving interest on client monies – which has a direct bearing on whether VAT can ordinarily be reclaimed by the practice.

Solicitors and legal firms obtain funds from clients for several reasons, including items such as:

1. Paying bills under a Power of Attorney
2. Prepayment for legal services ('on-account' fees)
3. Advance costs for 3^rd party advisors (such as Barristers)

Below, we consider those circumstances under which VAT would not be due.