Non-resident charged VAT for Solc services

malcolm4320 · Postby **malcolm4320** » Mon Jan 24, 2005 11:16 pm

Dear Sir,

I have recently sold my UK house which I owned for over 5 years. Before selling this I had a dispute with my business/house partner over some money that was taken up as an improvement loan on the property. Basically the money he kept and I had to involve a solicitor to recover the money.

My question is that the solicitor charged VAT on top of his fee. As I am a nonresident (Brit living in New Zealand 2.5yrs) should I have been charged the VAT? My solicitor seems to be of the opinion that because it was a property matter his fee is subject to VAT. I personnally would be more inclined to say it was a dispute over missing funds?

Can you help.

Thanks for your time.

M

johnfkavanagh · Postby **johnfkavanagh** » Tue Jan 25, 2005 2:36 am

Dear Malcolm

The place of supply rules treat a supply of services which directly relates to specific real property as taking place where that property is situated.

The question here is whether the supply of services you have received is sufficiently directly related to the property so as to fall within those rules. From what you say in your query, I can understand why you might feel that there is not a direct connection. I think that one would need more detailed information about the nature of the claim and the remedy before one could give a definitive answer to the question.

John Kavanagh
UK Tax Consulting Ltd
www.uktaxconsulting.co.uk
mail@uktaxconsulting.com

malcolm4320 · Postby **malcolm4320** » Mon Jan 31, 2005 8:41 pm

Mr Kavanagh, thankyou for your reply.

Ill try and explain the situation as best I can.

Basically myself and a friend bought a house together. We had an interest only mortgage between us for the initial purchase of the property. We increased this to sum of 11,000 GBP which we invested 10,000 in a further adventure. My friend was in full control of this money during this period and when the money was due to be returned to our joint account it was not.

I had to eventually employ a solicitor to (partially) recover this money. Although I could not legally force a sale of the house my solicitor advised the other party to purchase my share or sell the property which eventually happened.

These proceedings all occured while I was living in a non EU country.

I hope this helps the issue become clearer and I hope you are able to help.

Many thanks

M