The Gazette 1988

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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