Withdrawal of the Postal Concession – 1 December 2020
HMRC have recently published Revenue & Customs Brief 6 (2020) which announces the withdrawal of the postal concession from 1 December 2020.
This concession has been in place since 1991 and provided that solicitors and conveyancers did not need to charge VAT on fees raised to clients for property searches undertaken by post. This had been accepted on the basis that the charges raised did not truly meet the conditions for disbursements.
The removal of the concession, that will mean VAT is chargeable, will ensure consistent treatment of similar fees. The 2017 decision in Brabners LLP agreed with HMRC that electronic (online) search fees were not disbursements and subject to VAT. If the postal concession had continued, there would have been an inconsistency in the VAT treatment of similar charges.
HMRC go on to state that following a consultation with the sector ahead of withdrawing this concession, they understand that postal searches have limited current use and that the concession was confusing as it did not align with HMRC’s broader policy in this area.
Should you wish to discuss this change in policy, please get in touch with our team or your usual BHP contact.