SETTLEMENT AGREEMENTS and VAT

An employee must take independent legal advice on the meaning and effect of a Settlement Agreement before it is legally binding. Usually an employer will make a contribution towards the employee’s legal fees.

VAT charged by the independent legal advisor is not recoverable by the employer because it is a supply or service to the employee. However,the employers contribution would be classed as a business expense and therefore deductible for corporation tax purposes.

If you are an employer or employee requiring advice and assistance in relation to a Settlement Agreement contact us now on  01606 74301 or email gmr@mosshaselhurst.co.uk or kerry.greatorex@mosshaselhurst.co.uk