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This is the case of Barratt, Goff and Tomlinson v HMRC which was decided by the First Tier Tribunal on 20 January 2011.  The Tribunal found that the obtaining of the medical experts reports by the solicitors firm on behalf on its client was not part of the service provided by the firm.  It simply used the reports in providing its legal services to the client.  It followed that the fees paid to the expert could be treated as a disbursement and the firm did not have to charge VAT on them.

The case is interesting for various reasons:

• first, it provides a new gloss on the test for determining whether particular expenditure is a disbursement whether it has to be taken into account as part of the service provided to a client; and
• second, it is relatively novel because a third party, the Law Society, intervened on the side of the taxpayer firm before the First Tier Tribunal putting forward arguments, supported by an opinion from leading Counsel, which the Tribunal clearly found instructive in reaching its verdict.

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