Revenue Note for Guidance

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Revenue Note for Guidance

28. Special rules in relation to supplies of services


This section contains technical provisions in relation to supplies of services. The first two subsections are designed to ensure that services supplied by undisclosed agents and by persons who are not legally entitled to receive a fee are brought within the VAT net. The third subsection provides that persons registered for VAT will be able to recover the VAT element of legal and professional fees where the services are supplied to the insurance company under an indemnity policy, rather than directly to the taxable business. The fourth and fifth subsections make specific provisions in relation to receivers and liquidators.


(1) Subsection (1), which deals with undisclosed agents, provides that the supply of services by an agent acting in his or her own name but on behalf of another person is deemed to be a supply to and simultaneously by that agent.

(2) Subsection (2) deals with the supply of services by barristers. When a barrister supplies a service he or she is not legally entitled to receive a fee in respect of that supply even though appropriate steps may be taken at the time to secure payment. Accordingly, no part of the fee charged to the client may be regarded as consideration which the barrister “becomes entitled to receive” in accordance with section 37(1) and no liability to tax arises by virtue only of the supply of the service.

This subsection provides that the barrister’s service is deemed to take place when the consideration is paid. Therefore, a barrister will have no liability to tax until he/she has supplied a service and has been paid in respect of the supply. Also, the obligation to issue an invoice under Chapter 2 of Part 9 does not arise until the two conditions (supply and payment) have been fulfilled. In effect the barrister operates a form of moneys received basis – see section 80.

(3) Subsection (3) provides that, for VAT purposes, the services of a barrister or solicitor supplied for a firm of insurers are deemed to be supplied to the holder of the policy of insurance where the holder is indemnified under the policy in respect of the costs of such services. Consequently, a policy holder who is a taxable person for VAT purposes can recover VAT charged on solicitors’ and barristers’ services which relate to his or her taxable supplies.

(4) Subsection (4) provides that where a receiver/liquidator supplies a service/letting in the course of carrying on the business of an accountable person, or in the course of winding up a company, then the accountable person is deemed to have supplied the service/letting.

(5) Subsection (5) deals with a situation where a receiver takes control of a property and the receiver opts to tax a new letting of that property. Where the owner of the property was not an accountable person (i.e. had been engaged in exempt letting) the supply is deemed to be made by, and the option to tax deemed to have been exercised by, the owner.

Relevant Date: Finance Act 2020