Legal fees paid by unsuccessful party in a dispute

Usually, the unsuccessful party in litigation must pay the legal costs of the successful party. However, only the person to whom the legal services were supplied can make a valid input tax claim. The identity of the person making the payment is irrelevant, since that person cannot reclaim the VAT if he is not the recipient of the supply. The solicitor should address the invoice to his client, so the third party paying the costs should not, in any event, hold a VAT invoice to substantiate a claim to input tax.

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