legal.disbursements-vat Unreviewed

def disbursement_vat(facts: DisbursementFacts) -> DisbursementTreatment

@dataclass(frozen=True)
class DisbursementFacts:
    """The eight conditions of HMRC VAT Notice 700 section 25.1.1, each true when met."""

    #: you acted as your client's agent when you paid the third party
    acted_as_agent: bool
    #: your client actually received and used the goods or services
    client_received_and_used: bool
    #: your client was responsible for paying the third party
    client_responsible_to_pay: bool
    #: your client authorised you to make the payment on their behalf
    client_authorised_payment: bool
    #: your client knew a third party would provide the goods or services
    client_knew_third_party: bool
    #: the outlay is separately itemised on your invoice
    separately_itemised: bool
    #: you recover only the exact amount you paid
    exact_amount_recovered: bool
    #: the goods or services are clearly additional to your own supply
    additional_to_own_supply: bool

VatCostTreatment = Literal["disbursement", "recharge"]

@dataclass(frozen=True)
class DisbursementTreatment:
    """How to invoice the cost, and why."""

    #: disbursement: outside the scope of your VAT; recharge: part of your supply, VAT at its rate
    treatment: VatCostTreatment
    #: the names of the conditions not met, in HMRC's order; empty for a disbursement
    failed_conditions: List[str]
    reason: str

from fune.legal.disbursements_vat import disbursement_vat  # legal.disbursements-vat@^1

from typing import List

from .legal_disbursements_vat_types import DisbursementFacts, DisbursementTreatment

# HMRC VAT Notice 700 section 25.1.1, in HMRC's order. All must be met.
_CONDITIONS = (
    ("actedAsAgent", "acted_as_agent"),
    ("clientReceivedAndUsed", "client_received_and_used"),
    ("clientResponsibleToPay", "client_responsible_to_pay"),
    ("clientAuthorisedPayment", "client_authorised_payment"),
    ("clientKnewThirdParty", "client_knew_third_party"),
    ("separatelyItemised", "separately_itemised"),
    ("exactAmountRecovered", "exact_amount_recovered"),
    ("additionalToOwnSupply", "additional_to_own_supply"),
)


def disbursement_vat(facts: DisbursementFacts) -> DisbursementTreatment:
    """Disbursement (outside the scope of your VAT) or recharge (VAT due), and why."""
    failed: List[str] = []
    for name, attr in _CONDITIONS:
        value = getattr(facts, attr)
        if not isinstance(value, bool):
            raise ValueError("%s must be true or false, received %s" % (name, value))
        if not value:
            failed.append(name)
    if not failed:
        return DisbursementTreatment(
            treatment="disbursement",
            failed_conditions=[],
            reason="all eight conditions of VAT Notice 700 section 25.1.1 are met: pass the cost on at the exact amount, "
            "outside the value of your supply, with no VAT added",
        )
    return DisbursementTreatment(
        treatment="recharge",
        failed_conditions=failed,
        reason="not a disbursement for VAT purposes (%s not met): include the cost in the value of your supply "
        "and charge VAT on it at the rate of your main supply" % (", ".join(failed),),
    )

Install

fune build

With that line in your source, in a Python project (language python in fune.project), fune build resolves it and nothing else, pins them in fune.lock, downloads only the Python package of each, and builds the code above into your project’s .fune/build, one readable file per capability with a header linking back here. Or pin a range in fune.project and build in one step:

fune add legal.disbursements-vat

The manifest, vectors and README with only the Python implementation. Install it without the registry with fune add ./legal.disbursements-vat-1.0.1-python.fune, or fetch it from a terminal with fune pull legal.disbursements-vat@1.0.1:python.

The whole function, every language, is one file too: legal.disbursements-vat-1.0.1.fune, 24,265 bytes, sha256 f395722568fd97d13528843cefafa35d4e2f217ccc31ee0d5ac5bdbe53b13f21. It installs into a project of any language.

# fune: before legal.disbursements-vat

# fune: after legal.disbursements-vat

# fune: step legal.disbursements-vat after <n|label>

More from the author

1. `actedAsAgent`: you acted as the agent of your client when you paid the third party; 2. `clientReceivedAndUsed`: your client actually received and used the goods or services provided by the third party (this usually rules out your own travel and subsistence, phone bills and postage); 3. `clientResponsibleToPay`: your client was responsible for paying the third party (for example Stamp Duty on the client's contract); 4. `clientAuthorisedPayment`: your client authorised you to make the payment on their behalf; 5. `clientKnewThirdParty`: your client knew that the goods or services would be provided by a third party; 6. `separatelyItemised`: your outlay is separately itemised when you invoice your client; 7. `exactAmountRecovered`: you recover only the exact amount you paid to the third party; 8. `additionalToOwnSupply`: the goods or services are clearly additional to the supplies you make to your client on your own account.

This capability applies that checklist and nothing more. It returns the treatment, the names of any conditions that failed (in the order above) and a one-sentence reason. Deciding each fact is the professional judgement: HMRC's own examples in section 25.1.3 include a bank's telegraphic transfer fee, which is supplied to the solicitor, not the client, and so is a recharge even at cost.

On the invoice, a recharge goes into "value for VAT" with your fees, and a disbursement goes below the VAT line (Notice 700 section 25.1.2 has the worked example: services 80.00 + expenses 20.00 = value for VAT 100.00, VAT 20.00, disbursements 50.00, total 170.00). If you treat a standard-rated cost as a disbursement you cannot reclaim its input tax, because the supply was made to your client, not to you. Compute the VAT itself with finance.tax.add-vat.

Source: HMRC, "VAT guide (VAT Notice 700)", section 25 "Supplies made by or through agents: other situations", 25.1 "Disbursements for VAT purposes", https://www.gov.uk/guidance/vat-guide-notice-700, read 23 September 2026. See also "VAT: costs or disbursements passed to customers", https://www.gov.uk/guidance/vat-costs-or-disbursements-passed-to-customers. UK VAT only.

## Before you rely on this

**Not professional advice.** This capability calculates legal figures from published rules. It is a software component for developers, not legal advice. Rules change and every rate here has an effective date. Check that the dates cover your case. Verify results against the official sources listed above, and have a solicitor review how you use it, before anyone relies on the output. Provided "as is" under its licence, without warranty.

**Unreviewed.** This capability's implementations agree in every language and pass its published test vectors, which were worked out from the official sources cited. But no qualified solicitor has yet checked those vectors, or confirmed that the capability covers the cases it claims. Treat it as a draft. Do not use it for real people, money or decisions without your own expert review. Once a qualified reviewer signs off, this notice is replaced with their name, qualification and the date. Each new version needs fresh sign-off.

1.0.1 marks it unreviewed. The code and the tests are unchanged.

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