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VAT on Legal Costs Checker

Led by Diellza Nika Hyseni and Mentor Nika · Updated 24 October 2026

Can VAT on legal costs be recovered from the paying party? Check the input tax test in PD 44 para 2.3, partial recovery, litigants in person, fixed costs and disbursements, and see the VAT that can be claimed and the Precedent F(6) certificate. From DMD Costs, law costs draftsmen in Westhoughton, Bolton.

  • Free, with no sign-up
  • VAT worked out at 20%
  • Every rule sourced
  • Nothing leaves your browser

Answer for the receiving party: the party whose costs are being paid (if an insurer funds the claim, the insured). The answer on the right updates as you type. Add figures, net of VAT, to see the VAT that can be claimed. Nothing leaves your browser.

The receiving party
Its legal work was done by
The costs
The costs are
No VAT is added to its own expenses; put any VAT it paid on them in the next box.
The VAT on experts’ and other suppliers’ invoices addressed to the client, as a sum.
No VAT is added to court fees.

The checker applies PD 44 paras 2.1 to 2.14, Precedent F, PD 47 para 5.22, CPR 45.2 as amended from 1 October 2024 and 45.16, the VAT Act 1994, the VAT Regulations 1995 and HMRC’s guidance as they stood on 24 October 2026, with VAT at the standard rate of 20% (since 4 January 2011). The receiving party’s VAT position is a matter of fact for it and its advisers. It is a guide, not tax or legal advice.

Key points

  • DMD Costs’ VAT on costs checker is a free online tool that works out whether a receiving party can include VAT in its claim for costs against the paying party, how much, and what proves it.
  • It is completely free, with no sign-up, and runs in your browser; nothing you type is sent to DMD Costs. Add figures net of VAT to see the VAT that can be claimed, at the standard rate of 20%.
  • VAT should not be included in a claim for costs if the receiving party can recover it as input tax; if it can recover part, only the part that is not eligible for credit is claimed (PD 44 para 2.3).
  • Input tax is VAT on services supplied for a business (VAT Act 1994 s.24(1)): HMRC asks whether the legal services were for the business, normally needing a direct connection between the dispute and the business (VIT13600).
  • The paying party cannot reclaim the VAT it pays on the other side’s costs: a costs order is not payment for a supply to it (HMRC VIT13600; VATSC11531).
  • If the VAT is disputed, the receiving party must provide a certificate from its legal representatives or auditors in the form of Precedent F(6) (PD 44 para 2.5).
  • No VAT on the receiving party’s own employed lawyers’ work (HMRC VATSC11533; PD 44 para 2.13 for a Government Department), on a litigant in person’s own time (para 2.12), on court fees (para 2.11(6)) or in a pro bono bill (para 2.14); fixed costs under CPR 45.2’s list are net of VAT, which is added where appropriate, and none is added to Part 45 Section II sums.
  • A council or other public body that gets VAT refunded under s.33 or s.41(3) of the VAT Act 1994 should not claim it, in our reading, because costs are an indemnity (PD 44 para 2.4); in insurer-funded and subrogated claims it is the insured’s VAT position that counts (HMRC VIT13500).

How to use the VAT on costs checker

  1. Say who did the legal work. Solicitors or other lawyers the receiving party pays (and whether they charged UK VAT), its own employed lawyers (including a Government Department’s legal staff), the party itself in person, or pro bono lawyers under a s.194(3) order.
  2. Give its VAT position. Whether it is a public body that gets VAT refunded, whether it is registered for VAT on its own or in a VAT group, whether the legal services were for its business, and how much of the VAT on these costs it can recover.
  3. Say how the costs are worked out. Assessed costs, fixed costs under CPR 45.2, Section II fixed issue, judgment or enforcement costs, or IPEC scale costs.
  4. Add figures (optional). Profit or fixed costs, counsel’s fees, your own travel and postage, VAT charged on disbursements and court fees, all net of VAT.
  5. Read the answer. Whether VAT can be claimed and how much, the VAT on each item, and the certificate and bill requirements.

The rule: VAT the receiving party cannot recover

“VAT should not be included in a claim for costs if the receiving party is able to recover the VAT as input tax. Where the receiving party is able to obtain credit from HMRC for a proportion of the VAT as input tax, only that proportion which is not eligible for credit should be included in the claim for costs” (PD 44 para 2.3). The receiving party is responsible for claiming VAT only when it cannot recover it (para 2.4). Input tax means VAT on services supplied for the purpose of a business carried on by the person (VAT Act 1994 s.24(1)). HMRC first asks whether the legal services were for the business or for someone in a personal capacity, and there must normally be a direct connection between the substance of the dispute and the business’s activities (VIT13600). So a private individual usually claims the VAT, and a fully taxable business that litigated for its business usually does not. The paying party cannot reclaim VAT on the other side’s costs, because the costs order is not payment for a supply to it (VIT13600; VATSC11531).

Where the legal services were used partly for the business, only the business share of the VAT is input tax (VAT Act 1994 s.24(5)). A company in a VAT group recovers input tax through the group, so it counts as registered (s.43(1)). A council or other body under s.33 gets VAT on its non-business costs refunded whether or not it is registered, and a government department or NHS body gets VAT refunded on listed services, which for departments include the conduct of civil litigation (s.41(3); HMRC VATGPB10770): PD 44 para 2.3 speaks of input tax, but costs are an indemnity, so in our reading a body that gets the VAT back should not claim it (para 2.4). In insurer-funded and subrogated claims, the legal services are supplied to the insured, so it is the insured’s VAT position that counts (HMRC VIT13500; VAT Notice 701/36 para 5.2).

If the VAT is disputed: Precedent F(6)

Where there is a dispute about whether VAT is properly claimed, the receiving party must provide a certificate signed by its legal representatives or auditors, substantially in the form of Precedent F (PD 44 para 2.5). Certificate (6) states, on the basis of the receiving party’s last completed VAT return, whether it would be entitled to recover the VAT, or only a stated percentage of it, as input tax under s.24 of the VAT Act 1994. It is optional otherwise, and can go in the bill or be served later as a supplementary document (Precedent F; PD 47 para 13.10). A litigant in person claiming VAT must produce evidence, such as a letter from HMRC, at the hearing (PD 44 para 2.5).

Fixed costs and scale costs

“Where appropriate, VAT may be recovered in addition to the amount of fixed costs in rules 45.8 and 45.15A and Section IV, Section VI, Section VII, Section VIII or Section X of this Part and any reference to fixed costs in those Sections is a reference to those costs net of any such VAT” (CPR 45.2, as amended by SI 2024/839 from 1 October 2024; the text on justice.gov.uk is garbled, so read it on legislation.gov.uk). VAT on allowable disbursements in those regimes may be added too (CPR 45.57(3)). Part 45 makes no provision for VAT on the Section II fixed issue, judgment and enforcement costs: rule 45.16(1) allows only the sums in that Section unless the court orders otherwise (with court fees added by r.45.16(4)), and r.45.2 does not mention Section II, so the checker does not add VAT to them. In the Intellectual Property Enterprise Court, VAT may be recovered in addition to scale costs where appropriate, and the scale costs are net of it (CPR 46.21(6)).

Disbursements, travel and court fees

Court fees are passed on as disbursements, with no VAT added (PD 44 para 2.11(6); HMRC VTAXPER46000). A payment counts as a disbursement for VAT only if the supply was made to the client and the conditions in VAT Notice 700 para 25.1.1 are met; any VAT the supplier charged, such as an expert’s, then stays part of the disbursement and is claimable between the parties only if the receiving party cannot recover it. If the supplier’s service was supplied to the firm rather than the client, it is not a disbursement for VAT, and VAT is added at 20% on the whole amount, whether or not the supplier charged VAT (PD 44 para 2.11(3) and (4)). The firm’s own travel, meals, postage and telephone are part of its own supply, so VAT is added to them (para 2.11(2) and (5)), where they are allowed at all: between the parties, postage, telephone calls and local travel are in general not allowed (PD 47 para 5.22(3) and (4)).

Where no VAT is claimed

No VAT on a litigant in person’s own work, even if they are a solicitor (PD 44 para 2.12); none on an employer’s own employed lawyers’ work, because an employee’s services are not a supply (HMRC VATSC11533 para 4), and none on costs paid to a Government Department for its own legal staff (para 2.13); none in a bill under a pro bono order under s.194(3) of the Legal Services Act 2007 (para 2.14); and none where the lawyers charged no UK VAT, as for a client who belongs outside the UK (VAT Act 1994 s.7A; Sch 4A para 16). Where the VAT rate changes during the work, the bill is split, and the lower rate is assumed to have been elected unless something in writing says otherwise (paras 2.7 to 2.9); the standard rate has been 20% since 4 January 2011.

Sources

Frequently asked questions

Only the VAT your client cannot recover as input tax (PD 44 para 2.3). HMRC asks whether the legal services were for the purpose of the client’s business, which normally needs a direct connection between the dispute and the business (VIT13600). A private individual usually claims the VAT; a VAT-registered business that used the legal services for its business usually claims costs without VAT. If the paying party disputes it, serve the Precedent F(6) certificate signed by the legal representatives or auditors (PD 44 para 2.5).
No. A costs order is not consideration for a supply, so the paying party has no entitlement to recover input tax on the other side’s lawyers’ fees (HMRC VIT13600; VATSC11531). That is why VAT is claimed only where the receiving party cannot recover it itself.
Yes, where appropriate. CPR 45.2, as amended from 1 October 2024, allows VAT in addition to fixed costs under rules 45.8 and 45.15A and Sections IV, VI, VII, VIII and X of Part 45, and says those fixed costs are net of VAT. VAT on allowable disbursements is covered by CPR 45.57(3). Part 45 makes no provision for VAT on the Section II fixed issue, judgment and enforcement costs: rule 45.16(1) allows only the sums in that Section unless the court orders otherwise, and r.45.2 does not mention Section II, so the checker adds no VAT to them.
Not to court fees: they are passed on as disbursements without VAT (PD 44 para 2.11(6); HMRC VTAXPER46000). A payment is a disbursement for VAT only if the supply was made to the client and HMRC’s conditions are met; any VAT the supplier, such as an expert, charges stays part of it (VAT Notice 700 para 25.1.1). A charge supplied to the firm rather than to the client is not a disbursement for VAT, so VAT is added at 20% on the whole amount (PD 44 para 2.11(3) and (4)). Your own travel, postage and telephone are part of your services, so VAT is added where they are allowed at all: between the parties, postage, telephone calls and local travel are in general not allowed (PD 47 para 5.22(3) and (4)).
Claim only the proportion it cannot recover (PD 44 para 2.3). The Precedent F(6) certificate states, on the basis of the last completed VAT return, whether or what percentage of the VAT the receiving party would be entitled to recover as input tax. The checker applies the percentage you give to each item.
Not on their own work: a litigant in person is not treated as supplying services, so no VAT is chargeable on it, even if they are a solicitor (PD 44 para 2.12). VAT they paid to others, such as experts, lawyers paid for advice on the proceedings or help with the costs claim (CPR 46.5(3)(b) and (c)), can be claimed only if they cannot recover it, and they must bring evidence, such as a letter from HMRC, to the hearing at which the costs are assessed (PD 44 para 2.5).
No. An employee’s services are not a supply for VAT, so an employer claiming for its own employed lawyers bears no VAT on their work and claims none (HMRC VATSC11533 para 4); for a Government Department’s legal staff, PD 44 para 2.13 says the same. VAT on counsel’s fees and other disbursements is claimed only if the receiving party cannot recover it, or get it refunded.
In our reading, not if it gets the VAT back. Local authorities and other bodies under s.33 of the VAT Act 1994 get VAT on their non-business costs refunded, whether or not they are registered, and government departments and NHS bodies get VAT refunded on listed services, which for departments include the conduct of civil litigation (s.41(3); HMRC VATGPB10770). PD 44 para 2.3 speaks of input tax, but costs are an indemnity, and the receiving party must claim VAT only when it cannot recover it (para 2.4). Housing associations and charities are not s.33 bodies.
The insured’s. HMRC treats legal services in connection with an insured claim as supplied to the policyholder, not the insurer (VIT13500), and in subrogated claims the supplies of legal services are made to the insured party (VAT Notice 701/36 para 5.2). So VAT is claimable only if the insured cannot recover it; that the insurer cannot recover VAT is beside the point.
“The number allocated by HMRC to every person registered under the Value Added Tax Act 1994 (except a Government Department) must appear in a prominent place at the head of every statement, bill of costs, fee sheet, account or voucher on which VAT is being included as part of a claim for costs” (PD 44 para 2.2).

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