Can Deputies claim for tax work within the Bill of Costs?
During the Deputyship period, the Deputy may need to enlist the help of a tax advisor to assess P’s taxable income and to determine whether it is necessary to prepare a tax return for the tax year in question.
Bill of Costs. This time is often recovered at Grade C hourly rates and is not considered to merit a Grade B or A fee earner. The hourly rate of the tax advisor would need to be reflected in your client care letter. Some of this work may be considered Grade D in nature
When the tax work is carried out externally and the Deputy receives an invoice for the work carried out, this can be settled directly from P’s estate.
If it is necessary for the Deputy to prepare a tax return for P and they do not want the time assessed for it, they are able to claim fixed costs for this work. These fixed fees are outlined in Practice Direction 19B of the Court of Protection Rules (2017). If the tax return is completed in house efficiently, it may be more appropriate to take fixed costs for the task, which is better for cash flow.
- For the preparation of a basic HMRC income tax return, the fixed cost available is ‘an amount not exceeding £250.00 (plus VAT).’
- For the preparation of a complex HMRC tax return, the fixed cost available is ‘an amount not exceeding £600.00 (plus VAT).’ A complex tax return may arise where P has multiple investment portfolios or more than one rental property for example.
Overall, the Deputy is able to claim tax work done internally within the Bill of Costs, or depending on the level of time incurred, it may be more cost effective to take the applicable fixed cost for the work. However, work done by an external provider should be settled directly from P’s estate following the receipt of the invoice.
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