566 / 822
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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