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Bar Squared

Tel: +44 (0) 116 272 5000

25 NOV 2008

VAT Rate Change

Nick Hartwell

It was announced yesterday that from 1st December 2008, VAT will be payable at the rate of 15%.

I am pleased to announce that we are currently testing a new version of LEX and plan to make it available to users over the coming weekend. The release will enable you to deal with the topical VAT rate change. A process will recalculate the rate of VAT at 15% on all outstanding fee lines (whether billed or unbilled). You will have the facility available either to accept payments at the old VAT rate, or to adjust any bills in order that a refund of the VAT may be made to any cases that fall into the change over period. Please ensure that any VAT paid to you, whether it be at 17.5% or at 15% is in fact accounted for and returned to HMRC in your tax returns.

You will find guidance on the VAT rate change at http://www.hmrc.gov.uk/pbr2008/businessqa.pdf and also at http://www.hmrc.gov.uk/pbr2008/vat-guide-det.pdf. The salient paragraph contained therein is paragraph 9.1. "If you are a barrister or advocate and you follow the arrangements under which fee notes do not become VAT invoices until they are receipted, then the tax point for your fees is normally the date you receive payment. Fees received on or after 1 December will be liable to VAT at 15%. If you have received fees before 1 December for cases that will not be completed until after that date you can recalculate VAT at 15%, but may need to issue a credit note to your instructing solicitor. See paragraph 2.5."

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