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GAZETTE

DECEMBER 1988

Between:

Solicitors and VAT

THE H I GH COURT

REVENUE

J. J. Bou r ke, I n s pe c t or of Taxes,

Appellant

W. G. Br ad l ey & Sons, So l i c i t o r s,

Respondent

Note of J u d g m e n t delivered the 28 th day of July 1988

by Mr. Justice Lardner.

The question which arises for

decision in this case is one which

is raised in a Case Stated by a

learned Circuit Court Judge in

relation to fees charged and

received by Messrs. W. G. Bradley

& Sons as So l i c i t o rs in t he

particular circumstances wh i ch

have been found by the learned

Circuit Court Judge which are

referred to in the Case Stated.

Mess r s. Bradleys ca r ry on

practice as Solicitors in Dublin and

in the course of that practice the

learned Circuit Court Judge has

f ound that they were taxable

persons for the purposes of Value

Added Tax. There is no doubt that

they performed their obligations in

paying tax in respect of those parts

of their professional practice which

were concerned w i th acting for

Irish clients. Those facts are so

found in the Case Stated.

The particular facts which gave

rise to this case were in relation to

business wh i ch they undertook for

Lloyd's Unde r w r i t e rs as their

clients. Messrs. Bradleys were

retained by Lloyd's Underwriters

who had entered into contracts of

indemnity w i th Irish clients and

Bradleys were retained by Lloyd's in

r espect of t he se po l i c i es of

insurance to provide Solicitors'

services.

Lloyd's have no place of estab-

lishment in this country but they

have an establishment in the United

Kingdom. It was in respect of

business carried out in a number of

cases for Lloyd's that estimated

assessments were raised by the

Revenue Commi ss i one rs upon

Bradleys. These assessments were

uphe ld by t he Ap p e al Com-

mi s s i one r.

Mess r s.

Bradleys

appealed the decision to the Circuit

Court and the learned Circuit Court

Judge found that Messrs. Bradleys

were not liable for VAT.

I think that the crucial findings of

facts which the learned Circuit

Court Judge made are contained at

paragraphs 6(e) and (f) in the Case

Stated. The learned Circuit Court

Judge found as follows:

" 6 . On the basis of the foregoing

oral and documentary evidence

I f ound t hat the f o l l ow i ng

matters to be proved or admitted

in the course of the hearing:

(e) The amo u n ts of t he

estimated assessments which

were the subject of the Appeal

were attributable entirely to

s e r v i c es supp l i ed by t he

Respondents in advising and

representing the said Under-

writing Syndicates at Lloyd's

wh i ch the Respondents had

treated as not c on s t i t u t i ng

services supplied wi t h in the

State but services wh i ch were

deemed to be supplied where

the Syndicates in question had

their establishment elsewhere in

the community, that is to say, in

London.

(f) The services in question were

se r v i ces supp l i ed by t he

Respondents as Solicitors in the

cou r se of a c t i ng on t he

instructions of Unde rwr i t i ng

Sy nd i c a t es as a f o r esa id in

relation to litigation in which the

named Defendant was indemni-

fied under an Insurance Policy

issued by a Lloyd's Syndicate.

The learned Circuit Court Judge

proceeds then to find certain other

ancillary findings of fact which are

also set out in paragraph 6 of the

Case Stated.

I think that those findings of fact

were not challenged at any time

before me and it seems to me that

the documentary evidence amply

supports the findings of fact arrived

at by the learned Circuit Court

Judge.

The question which arises in this

case is whether in those circum-

stances the conclusions of the

learned Circuit Court Judge were

correct?

The charge to Value Added Tax

is set forth in Section 2 of the Value

Added Tax Act 1972:

" 2 - (I) With effect as and from

the specified day a tax, to be

called Value Added Tax, shall,

s ub j e ct to t h is Act

and

Regulations, be charged, levied

and paid -

(a) on the delivery of goods and

t he r ende r i ng of s e r v i c es

delivered or rendered by an

a c c oun t ab le person in t he

course of business . . . "

Mr. Cooke on behalf of Messrs.

Bradleys, t he t axpaye r, has

submitted that Value Added Tax is

a tax that falls to be charged on

consideration paid for services

rendered in furtherance of any

commercial transaction. I think that

is a correct understanding of the

charged tax.

The question then arises, what

was t he bus i ness for w h i ch

services were rendered by Messrs.

Bradleys? I think that on the facts

found by the learned Circuit Court

Judge, I would have reached the

same conclusion, i.e. that the

services were supplied by Messrs.

Bradleys in advising and represent-

ing Lloyd's Underwriters. I think

that there was a retainer of Messrs.

Bradleys to render certain services

as Solicitors.

In essence, the contract was to

render those services to the Lloyd's

Syndicates. It is true that the

services were to represent, advise

and de f end pe r sons in Irish

litigation insured by Lloyd's in

Ireland. But it is clear from the

Policies of Insurance in question

that the insurers remained in sole

control of the proceedings for all

practical purposes. There are some

exceptional circumstances but it is

not

s u bm i t t ed

t h at

t ho se

considerations arose in any of the

cases under consideration at this

hearing.

Messrs. Bradley's services were

rendered to Lloyds and Lloyds were

thereby enabled to fulfill their

obligations to the insured persons

under their insurance policies. It

seems to me therefore that the

commercial transaction for which

the services were rendered was the

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