VAT treatment of pre-payments received by solicitors
Taxation
01/04/2025
outlines the tax treatment of pre-payments for services where the service itself may not be completed until a later date. Section 74(2) of the Value-Added Tax Consolidation Act 2010 requires that VAT must be accounted for on the pre-payment where it is lodged to the solicitor's office account.
However, this situation does not arise for solicitors as the Solicitors' Accounts Regulations require that pre-payments (e.g. retainers, counsel's fees etc.) be lodged to client account until the costs have become properly due by reason of the relevant work or professional commitment having been rendered.