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GAZETTE

DECEMBER 1988

Par l i amentary Ques t i on f or WRI TTEN answer

on Tuesday 22nd November 1988

To ask t he M i n i s t er f o r Finance if he i n t ends t o t a ke steps t o c o r r e ct

t hé a n oma l o us pos i t i on a r i s i ng out of t he dec i s i on of t he H i gh Cou rt

in a case ( de t a i ls supp l i ed) r e g a r d i ng t he l i ab i l i ty f o r VAT of

s o l i c i t o r s; a nd if he w i l l ma ke a s t a t eme nt o n t he ma t t e r.

- P a t r i c k M . Cooney

[Mr. J. J. Bou r ke (Insp. of Taxes) V. W. G. Bradley & Sons, Solrs.l

transaction between Lloyd's and

Mess r s.

Bradleys.

In t hese

circumstances the Act determines

the basis of liability. Section 5(5) is

headed "Place of supply - general

rule" wh i ch I need not have regard

to because the Section is prefaced

by "Sub j ect to sub-Sections (6)

and (7)". It is sub-Section 6(e)(ii)

wh i ch is applicable in this case.

This Section provides:

"(e) The place of supply of services

of any of the descriptions specified

in the Fourth Schedule shall be

deemed for the purposes of this

Act to be:

(ii) in case they are received by a

person who has no establishment

in the country in which, but for this

sub-paragraph, the services would

be deemed to be supplied and are

so received for the purposes of any

business carried on by him, the

p l ace

wh e re

he

has

his

establishment or (if more than one)

the establishment of his at wh i ch

or for the purposes of wh i ch the

services are most directly used or

to be used or (if he has no

establishment anywhere) the place

where he usually resides."

As I have already stated, my view

is that the primary commercial

transaction in this case was the

supply of services as Solicitors to

Lloyd's Underwriters who have

their established offices within the

European Community in London

and that, therefore, London is the

place where the services are

deemed to be rendered by virtue of

Section 5(6)(e)(ii). This leads me to

the conclusion that the learned

Circuit Court Judge was correct in

the conclusion he arrived at in this

Case Stated and that the question

posed in the Case Stated as

follows:

"12. The question of Law for the

decision of the High Court is

whether I was correct in holding

that the services supplied by the

Respondents were supplied to and

received by the Un d e r w r i t i ng

Syndicate and not by the policy

holder."

s hou ld be a n swe r ed in t he

affirmative.

I will allow the Respondents the

costs of the Appeal.

Reply

The High Court decision referred to

does not affect the VAT liability of

solicitors as such but alters the

interpretation of contract law as it

a f f e c t s s o l i c i t o r s,

i nsu r ance

companies and policyholders. Prior

to the decision, services supplied

by a so l i c i t or a c t i ng on t he

i n s t r u c t i o ns of an i nsu r ance

underwriter in representing an

insured defendant in litigation were

regarded for VAT purposes as being

supplied to the insured person. The

High Cou rt f o u nd t hat such

services should be regarded as

being supplied to the insurance

underwriter.

The implications of the decision

are being studied in detail at

present bo th w i t h in my own

Department and in the Office of the

Revenue Commissioners. When

these studies are completed I will

consider what measures, if any, are

appropriate.

WEST CORK BAR ASSOC I A T I ON

(Left to right): James J. Ivers, Director General of The Law Society;

Edward O'Driscoll, Solicitor and outgoing President; Tony Neville,

incoming President and Virgil Horgan, Secretary.

PHILLIPS "LIMERICK" COMPETITION

The winner of the

Phillips "Limerick" Competition

is: Bill Ho l ohan,

Solicitor of Hughes & McEvilly, The Coach House, 12 Emmet Place,

Cork.

The prize is a Phillips 596 Pocket Memo and Carry Case.

Mr. Holohan's " L i me r i c k" was as follows: —

There was a young lawyer named Paul,

A memory he had not at all,

But a Phillips

machine

Has changed all that scene.

Now there's nothing he does not recall!

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