Barratt, Goff and Tomlinson and The Law Society as Intervenor v Commissioners for Her Majesty's Revenue and Customs
Decision date: 20 January 2011
Neutral citation: [2011] UKFTT 71 (TC)
Overall AI summary confidence: high
Short overview
This short overview is intended to summarise the case, issues and outcome so far as they are supported by the judgment.
AI confidence in this short overview: high
This case concerned whether fees paid by a solicitor firm (Barratt, Goff & Tomlinson) for medical records and medico‑legal reports, which were recharged to clients itemised and without profit, were disbursements excluded from VAT under Article 79(c) of the VAT Directive or part of the firm's own VATable legal services. The tribunal accepted the firm's factual case that the payments were made in the client's name and on the client's behalf, booked through the firm's office/suspense account, and thus qualified as disbursements. The appeal was allowed and costs were awarded to Barratts against the Commissioners.
Ratio decidendi
This summary is intended to identify the ratio decidendi, meaning the legal reasons for deciding and the binding part of the decision.
AI confidence in this ratio decidendi summary: high
An amount paid by a solicitor does not form part of the solicitor's taxable consideration where the payment is incurred in the name of and on behalf of the client and is recorded through the solicitor's office/suspense account; where the third‑party supply is properly characterised as supplied to the client and the solicitor merely acts as agent in paying, that expenditure may be treated as a disbursement for VAT purposes (Article 79(c) test).
Obiter dicta
This summary is intended to identify obiter dicta, meaning observations made by the way that were not necessary to deciding the case and are not binding.
AI confidence in this obiter dicta summary: medium
The judgment notes a continuing grey area in English authorities distinguishing true disbursements from costs forming part of a solicitor's own service and treats the EU decision in De Danske as important guidance. It also observes that a 2007 amendment narrowing the VAT exemption for medical care has increased expert registration and affected the practical significance of some disbursement issues.