How can I make sure I'm paying the right VAT?

Our lawyer, Fiona McNulty, explains how legal costs should be calculated to take the recent VAT increase into account
Legal cartoon
© Merrily Harpur (harpur.org)
Question: I began the process of buying a leasehold apartment in August last year. Completion is planned for later this month. My solicitor had quoted £2,500 (plus VAT) for legal fees but has not invoiced me as we agreed I would be invoiced on exchange of contracts.

In view of the recent VAT increase, what rate of VAT will be payable on my legal fees?

Answer: The VAT increase from 17.5 per cent to 20 per cent was announced in June last year, and came into effect on January 4 this year. All goods and services supplied on or after this date must have VAT charged on them at 20 per cent.

If goods or services were supplied within 14 days of January 4 and an invoice was raised on that date, or one is raised after it, VAT at 20 per cent should be charged. In addition, any invoices raised on January 4 or later for goods and services provided before that date can have VAT charged at 20 per cent.

The legal work carried out by your solicitor spans across the two periods where the two different VAT rates apply, so your solicitor can choose to charge VAT on the entire fee at 20 per cent, or charge 17.5 per cent VAT on the legal work which was completed between August last year and January 3 this year, and 20 per cent on the work from January 4 to the completion of your purchase. If your solicitor is agreeable to the second option then they will have to issue two invoices.

What’s your problem?


If you have a question for Fiona McNulty, please email legalsolutions@standard.co.uk, or write to Legal Solutions, Homes & Property, London Evening Standard, 2 Derry Street, W8 5EE.

We regret that questions cannot be answered individually but we will try to feature them here.

Fiona is a partner in the private client property practice of Thring Townsend Lee & Pembertons LLP. (ttuk.com)

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