Pre-Budget Update 2008 - VAT for Law Firms

The announced VAT changes that take place with effect from 1 December 2008 have specific effects on practices who receive standard monthly payments from LSC as follows:

If you receive Standard Monthly Payments (SMPs) from the LSC for legal aid work, the VAT treatment under the agreed procedures depends on the extent to which each payment relates to completed cases. Where you have already received payments on account of cases that are incomplete or have not been started prior to 1 December 2008, you can now recalculate VAT at 15% and amend your next VAT return.

In addition to the above, where, before 1 December 2008, you have issued a VAT invoice or received payment for any type of work that will not be completed until on or after 1 December 2008, you can recalculate VAT at 15%, and will need to issue a VAT only credit note for the excess VAT charged.

For more information on how this article relates to you or your firm, call us today on 0845 330 3200.