# VAT /solicitors' fees/ personal injuries claim



## MOB (23 Feb 2010)

Separated from this thread



Brendan said:


> Some solicitors are not trustworthy. They might negotiate a settlement with the insurance company to include damages and their costs. So if the solicitor asks for €50,000 and the insurance company offers €35,000 + €10,000 costs, what will the solicitor do? In the vast majority of cases, they will, of course, represent your best interests..



I forgot to mention that there can be good financial reasons for the insurer to offer a separate cheque toward legal costs;  this can reduce the overall cost, thus funding a higher nett settlement amount for the claimant (or a lower cost to the insurer, depending on your perspective).   So, just in case anyone might think that a solicitor (acting properly and in your interests) should not agree to negotiate a "two cheques" settlement proposal, it ain't necessarily so.


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## Brendan Burgess (24 Feb 2010)

*Re: What to do if you are injured in an accident*

Hi MOB

How does paying the solicitor directly reduce the overall cost? 

If I get a settlement of €10,000, and the solcitor charges me €4,000, then I pay the solicitor €4,000.

If I get a settlement of €6,000 and the insurance company pays the solicitor €4,000 directly, surely it's the same thing. 

I thought it might be VAT, but if the service is provided to the client, the client must be invoiced and the insurance company can't reclaim the VAT, whether they pay the solicitor directly or not. I don't know if insurance companies can reclaim VAT anyway.


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## MOB (24 Feb 2010)

*Re: What to do if you are injured in an accident*



Brendan said:


> Hi MOB
> 
> .................
> 
> I thought it might be VAT, but if the service is provided to the client, the client must be invoiced and the insurance company can't reclaim the VAT, whether they pay the solicitor directly or not. I don't know if insurance companies can reclaim VAT anyway.



Sorry Brendan - should have explained in more detail.  It is VAT.  Bear in mind that in law, the person deemed to be actually paying the compensation is not the insurance company but their insured .   If the insured is registered for VAT, they can pay a legal fee and claim an input credit, while the insurer reimburses to them( or pays on their behalf) the VAT-exclusive fee.  Or at least that is my understanding of it.


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## Brendan Burgess (24 Feb 2010)

*Re: What to do if you are injured in an accident*

Hi MOB

I am very surprised at that. 

The person receiving the service in this case is the claimant. 

The solicitor should invoice the claimant for say, €4,000 + VAT or €4820. 

If the insurance company or the insured person wants to pay the €4,820 direct to the solicitor, that is fine. But no one should be reclaiming VAT. 

Unless there is some special arrangement for solicitors fees in personal accident cases which I doubt.

If you are acting for the defence of a business who is registered for VAT, of courst they can claim VAT.


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## MOB (24 Feb 2010)

*Re: What to do if you are injured in an accident*

You know, you may be right; it may well be only applicable where there is a VAT-registered claimant.  TBH I haven't looked into it.  But to give an analogy - and leaving aside all insurance aspects - suppose one of your employees' vans reversed into a neighbours' building causing damage and you simply agreed to pay all repair costs.   The Engineer inspecting the damage is rendering a service to the neighbour; the builder repairing the building is rendering a service to the neighbour; If you have agreed to discharge their invoices, is it unlawful for them to issue the invoices to you for payment?  More to the point, is it unlawful for you to claim the VAT input credit on those invoices?  I am not sure that it is.  It seems like a legitimate business expense to me.  By the same token, I would class the solicitor's fee as being equally legitimate.  But perhaps it is as you say.


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## Bronte (25 Feb 2010)

This thread has been split from another one, which one?


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## Brendan Burgess (25 Feb 2010)

http://www.askaboutmoney.com/showthread.php?t=132512


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