As a barrister, have you ever wondered whether you’re handling VAT correctly? Perhaps you’ve asked yourself: Do I need to register for VAT as a Barrister? What expenses can I reclaim VAT on? Could I benefit from the Flat Rate Scheme?

While VAT can appear complex, breaking it down into simple concepts makes it much more manageable. This guide will help you grasp the essential aspects of VAT, giving you the clarity you need to navigate your tax obligations with confidence.

Who needs to register for VAT?

If your taxable turnover exceeds the VAT registration threshold, which is currently £90,000 per year, you are required to register for VAT. This means that if the total income from your legal services surpasses this amount within a rolling 12-month period, you must register with HMRC for VAT.

If your turnover is below the threshold, you do not have to register for VAT. However, you can choose to voluntarily register for VAT. It is common that barristers opt for voluntary registration and this will allow them to reclaim VAT on business-related expenses. 

VAT registration can be carried out using the following link – https://www.gov.uk/register-for-vat/how-register-for-vat

If you require assistance with your VAT registration, we can complete this process for you for a one off fee of £60.00 + VAT. Please do not hesitate to call us on 0116 298 2425 or e-mail your enquiry to enquiries@barristeraccountantuk.co.uk

We are a firm of Chartered Accountants providing specialist accounting and tax services for self employed Barristers. 

Eligible business expenses for Barristers

Reclaiming VAT on business expenses can have a significant impact on reducing your overall operating costs, but it’s important to understand the specific rules and guidelines to ensure compliance with HMRC.

• Office supplies and equipment
  • Stationery (e.g., paper, pens, filing systems)
  • Office furniture and equipment (e.g., desks, chairs, computers, phone systems)

If these items are used for both personal and business purposes, you can only reclaim VAT on the portion used for business activities.

• Legal research and subscriptions
  • Legal databases (e.g., Westlaw, LexisNexis)
  • Journals or legal publications
  • Specialised online research tools for case law and legal precedents

• Professional services
  • Accountancy or bookkeeping services
  • Tax advisory services (e.g., VAT advice, corporation tax advice)
  • Legal support services and consultants (e.g., paralegals, clerks, experts or specialist advisers)

It’s important that the services are purely for business use, as personal services would not be eligible for VAT reclaim.

• Business-related travel and accommodation
  • Transport costs (e.g., trains, taxis, flights, car hire)
  • Hotel stays and accommodation charges when traveling for work purposes
  • Meals during business travel (subject to restrictions)
    • VAT is reclaimable on meals included in business conference events.
    • VAT cannot be reclaimed on meals for client entertainment and alcohol.

It is essential to keep detailed records, including receipts and a clear business justification for the travel, to ensure the VAT is recoverable.

• Advertising and marketing costs
  • Website development or hosting fees
  • Online advertising (e.g., Google Ads, LinkedIn promotions)
  • Printed materials (e.g., business cards, brochures)

• Training and development
  • CPD (Continuing Professional Development) courses
  • Workshops or conferences related to legal practice areas
  • Specialist certification programs for areas like tax law, immigration law, etc.

Submitting VAT returns

VAT-registered Barristers must submit VAT returns to HMRC, usually quarterly. 

You’ll calculate:

Output Tax: VAT charged to clients
Input Tax: VAT paid on expenses

If output tax exceeds input tax, pay the difference. If input tax exceeds output tax, HMRC will refund you.

VAT returns are due one month and seven days after the VAT period ends, with payment required by the same deadline.

Important considerations

Apportionment: If an expense is used for both business and personal purposes (e.g., a mobile phone or car), you must apportion the VAT reclaim to reflect the percentage of business use. Only VAT on the business portion can be reclaimed.

Keep records: HMRC requires that you keep detailed and accurate records of all VAT-relevant transactions, including invoices, receipts, and a log of business use. This will help ensure that your VAT claims are accurate and defensible in case of an audit.

Common VAT mistakes to avoid

Not registering for VAT on time – If your taxable turnover exceeds the VAT threshold of £90,000, make sure you register for VAT on time. Failing to do so can result in penalties from HMRC.

Forgetting to charge VAT on taxable services – If you’re VAT-registered, ensure that you’re charging VAT on all applicable services. Failure to charge VAT when required can cause issues with HMRC and may lead to additional fines.

Claiming VAT on Personal Expenses – Only claim VAT on items used for your business. Personal expenses, such as those unrelated to your legal practice, are not eligible for VAT reclaim.

Missing VAT return deadlines – Always file your VAT returns by the deadline to avoid late submission penalties and interest charges.

If you are looking for an accountant to help and guide you with your accounting and tax needs, please get in touch.
E-mail us at enquiries@barristeraccountantuk.co.uk or call us on 0116 298 2425.