VAT on Planning Application Fees

[John Smith 12345]

Hi,

I have agreed to obtain planning permission for a client of mine, by applying to a Local Authority. I am a planning consultant. The Council levy a fee for submitting the application, which I pay and then pass to the client on my invoice. Do I need to charge VAT to the client on top of the fee that the Local Authority charge? I am VAT registered. I understand that there was a court decision in 2020 where a solicitor had to charge a client VAT on a local authority search. This seems odd to me, as it seems a clear case of a disbursement that was incurred on behalf of the client. Does this same approach then apply to planning application fees? Any comments gratefully received.

Thanks,

John

 

[UK Contractor Accountant]

https://www.gov.uk/guidance/vat-costs-or-disbursements-passed-to-customers

 

[John Smith 12345]

Many thanks for sending this link. I have seen this guidance and it suggests to me that planning application fees should not need VAT added when being passed to a client. However, my accountant sent me a weblink to a legal case in 2020 where a solicitor was told they had to charge VAT on land searches carried out for clients. My accountant thinks this changes what would be needed for a planning application fee. This seems really odd to me - hence seeking out any other help.

 

[UK Contractor Accountant]

Your Accountant is talking about a concession that has been withdrawn. Follow the guidance in the link provided above.

https://www.gov.uk/government/publi...h-fees-charged-by-solicitors-and-conveyancers

 

[Rawlinson Pryde]

The Law Society have issued guidance

https://www.lawsociety.org.uk/en/topics/business-management/vat-treatment-of-disbursements-and-expenses

https://www.rossmartin.co.uk/vat/vat/4348-new-law-society-guidance-on-disbursements

 

[Bob Morgan]

My own usual practice is for the client to pay for the Planning and Building Regulation Fees directly. Your Fee Agreement and Fee Schedule should have been organised around Key Events. In this way, the fee for YOUR WORK related to a Planning Application, will be due at the time of submission to the Local Authority. It can also be a particular juncture at which to SUSPEND WORK - Where the client fails to pay. Your Fee Agreement should also cover the liability for Programme Delays too, should this be the case.

Local Authority Fees are now substantial. Keep in mind also, that what used to be informal FREE consultations with a Planning Department, now have to be paid for.

 

[oz07]

My architect always has me pay the planning direct. I never thought there was vat on their fees which is presumably why he does this. Suggest you do the same

 

[John Smith 12345]

Thanks everyone for your responses, which are hugely appreciated.