In a continuing series, the Law Society's practice advice service offers guidance on a range of issues


Q I act for a tenant who is required to pay his landlord's legal costs. Will my client be able to recover the VAT charged on the bill?



A Revenue & Customs Notice 742 (Land and Property) points out that payment by a tenant of a landlord's costs incurred in respect of the grant of a lease or licence would be regarded as part of the consideration for the supply by the landlord to the tenant. If the supply to the tenant is a taxable supply, then the landlord should issue a VAT invoice addressed to the tenant for the amount of the legal costs plus VAT (note, the landlord's solicitor should not invoice the tenant for the legal costs because the tenant is not the recipient of the supply by the solicitor). As the paying party, if your client is registered for VAT, he will be able to recover the whole or part of the VAT charged to him.



The ability to recover VAT will depend on whether the landlord has elected to waive exemption from VAT in relation to the property (usually referred to as the option to tax).



If no option to tax has been made, the landlord would not be entitled to an input tax credit on his costs, so your client would be required to pay the gross costs including the VAT element. There will have been no taxable supply to your client, so he will not receive a VAT invoice and will be unable to recover as input tax the amount representing VAT on the landlord's costs which he has paid to the landlord.



If the landlord has opted to tax so that VAT is payable in respect of the rent or premium, the landlord can recover the VAT element of the costs he pays to his solicitor. Your client will only be required to pay the net amount of the landlord's costs, but to that net amount the landlord will add a VAT charge in respect of the supply he makes to the tenant.



In effect, the amount paid by the tenant would be the same whether or not the landlord has opted to tax, but only if the landlord has done so will the tenant receive a VAT invoice from the landlord and be able to recover the VAT element if the tenant is a registered taxable person.



Please see the Law Society VAT Guide 1996 available at www.lawsociety.org.uk.





Q I understand the Law Society has prepared a new standard business lease. Where can I find more information?



A The Law Society has prepared new versions of the standard business leases, primarily to accommodate the prescribed clauses leases referred to in the Land Registration (Amendment) (No2) Rules 2005, although there are a number of other minor changes. The new documents are: The Law Society Business Lease (Part of Building) (Unregistered) 2006; The Law Society Business Lease (Part of Building) (Registered) 2006; The Law Society Business Lease (Whole of Building) (Unregistered) 2006; The Law Society Business Lease (Whole of Building) (Registered) 2006.



The forms are available from: Oyez (www.oyezformslink.co.uk), Laserform (www.laserform.co.uk), LexisNexis (tel: 0845 370 1234), Peapod (www.peapodlegal.co.uk) and Shaws (tel: 01322 621 100).





Q I understand that there is a new pre-action protocol for possession claims based on rent arrears. Is this correct?



A Yes. The new pre-action protocol came into force on 2 October 2006 and it applies to residential possession claims by social landlords which are based solely on rent arrears. It can be found on the Ministry of Justice's website: www.moj.gov.uk in the Civil Procedure Rules section.





Q What is the Law Society doing about the safety of solicitors at police stations?



A The safety of solicitors at police stations is an issue because solicitors are locked in interview rooms or cells with detainees without an escape route if the client becomes agitated or violent. Often there is no alarm or panic button, or it is inappropriately placed.



The Law Society met last year to discuss this issue with the head of the police leadership and powers unit at the Home Office, a representative of the Health and Safety Executive (HSE) and a member of the Home Office buildings and estates unit. The HSE representative outlined how the issue had come to its attention and highlighted some examples of poor practice.



The meeting was productive. The areas of common ground identified will be developed into a document to set out minimum standards and good practice for police and solicitors. It was agreed that the Home Office would draft a circular addressing the issue and setting out best practice for the police to implement locally in consultation with solicitors, which the Law Society's criminal law committee will consider.



See www.lawsociety.org.uk/areasoflaw.law (click on 'criminal law') for further information.





Q I act for a group of claimants in relation to multi-party action. A group litigation order (GLO) has been granted. My colleague informs me that we need to forward a copy to the Law Society. Is this correct?



A Yes. Practice Direction 19B on Group Litigation that supplements section 111 of part 19 of the Civil Procedure Rules states that after a GLO has been made, a copy of it should be supplied to: the Law Society (Practice Advice Service), 113 Chancery Lane, London WC2A 1PL; and the Senior Master, Queen's Bench Division, Royal Courts of Justice, Strand, London WC2A 2LL.



The Practice Advice Service operates the Law Society's multi-party action information service. For further information, tel: 0870 606 2522.



This column is compiled by the Law Society's practice advice service, tel: 0870 606 2522. Comments relating to the questions should be sent to Nasrin Master, the Practice Advice Service Manager, The Law Society, 113 Chancery Lane, London WCA 1PL. The service endeavours to ensure that the information provided is correct but does not accept liability for error or omission. Readers should bear in mind that this publication is intended for information purposes only and should not act on the basis of the information provided without verifying it first