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VAT on costs awarded by a court

VAT on costs awarded by a court

A VAT registered business, defendant, has been ordered by the court to pay costs direct to a claimant. This amount
amount includes Input VAT, although the claimant will not issue any paperwork and the defendant wants to know if they can reclaim any Input VAT that is included in these costs ?

Andrew Rein


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14th Mar 2005 16:39

What has the court ordered to be paid?
Any amount payable by your client to the claimant will not include VAT. There is no supply to your client and, therefore, no VATable transaction.

However, if the court has ordered that out of pocket costs are paid and the claimant is VAT registered, then the "out of pocket" amount should be calculated after the claimant has recovered all of the VAT it is entitled to.


Paul Taylor
VATease - VAT Advice

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14th Mar 2005 11:00

i may be missing something
if the claimant is not vat registered then the VAT is properly a cost to the claimant, but if the claimant is vat registered then the VAT is not a cost.

i would have thought that vat was outside the scope of a court award, so there would be nothing for defendent to claim back.

BUT surely if the claimant is VAT registered then adding vat to the costs claimed is fraudulant?

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