In 2008, HMRC argued that personal injury clients should pay VAT on the cost of medical reports obtained by their solicitors. This was against the established principle that the report fees were disbursements, with the solicitors acting as agents for their clients. However, HMRC argued that because the solicitors ‘perused the records and reports as an integral part of the legal services it provided’, it followed that VAT should be paid on them.


A Tax Tribunal has now upheld the previous practice, so that VAT is not payable on such medical reports. Note that this decision applies to other areas in which disbursements are incurred (eg local search fees on property purchases). [2011] LSG 27 January 2.