VAT on medical reports

Barratt Goff & Tomlinson (BGT) supported by the Law Society have successfully challenged the assessment for VAT of medical reports and records to be used in litigation. The fee paid to medical experts’ reports and records had previously been accepted by HMRC as a disbursement and therefore free of VAT but in August 2008 HMRC asserted that because a firm perused the records and reports as an integral part of the legal services it provided, VAT should henceforth be paid on them. The Manchester Tax Tribunal has accepted the proposition that although the use of medical reports and records is part of the legal services provided and upon which VAT was already charged as part of the tax payable on the lawyer’s fees, the ‘obtaining’ of the reports was a separate service carried out, as an agent, on behalf of the injured party, and any expense incurred was merely a disbursement so not subject to VAT.