VAT on Asylum Legal Work Guide | Online Accountants

Is There VAT on Asylum Legal Work? A Guide for UK Solicitors

Published: March 2026

8 min read

Navigating the Value Added Tax (VAT) requirements for immigration and asylum cases can be complex. While most legal services attract the standard 20% rate, asylum legal work follows specific rules that often place it outside the scope of UK VAT.

The General Rule: Why Asylum Work is "Outside the Scope"

Under HMRC VAT Notice 741A, the "place of supply" for professional services depends on where the customer "belongs." For VAT purposes, an individual who has not yet been granted a right to remain in the UK is treated as belonging in their country of origin. Because the service is technically being "exported" to a client residing (legally) outside the UK, no VAT is charged on the fees.

Zero-Rated vs. Exempt vs. Outside the Scope

It is a common misconception to call asylum work "exempt." In reality, it is outside the scope of UK VAT. This distinction is beneficial for law firms:

Exempt: You cannot reclaim VAT on related business expenses (like office rent or software).
Outside the Scope: You do not charge the client VAT, but you can still reclaim "input tax" on the business costs incurred to provide that service.

When Does the 20% VAT Rate Apply?

The VAT status of a client is not permanent; it changes based on their immigration journey:

Asylum Seekers & Overstayers: Typically outside the scope. HMRC guidance confirms that even overstayers are treated as belonging in their home country until a new status is granted.
Granted Leave to Remain: The moment a client is granted refugee status, a student visa, or any leave to remain, they "belong" in the UK for VAT purposes. Any work started after this date is subject to the standard 20% VAT rate.
Legal Aid Cases: For those without status at the point of instruction, accounts are typically processed as VAT-free.

Key HMRC Sources for Your Practice

HMRC VAT Notice 741A - Place of Supply of Services
HMRC Internal Manual VATPOSS04600 - Usual place of residence
Scottish Legal Aid Board (SLAB) VAT Guidance

Frequently Asked Questions

Do immigration lawyers charge VAT to asylum seekers?

No, legal services for asylum seekers are generally "outside the scope" of UK VAT because the client is deemed to reside in their country of origin until leave to remain is granted.

What is the VAT rate for a refugee with leave to remain?

Once an individual is granted leave to remain, they are a UK resident for VAT purposes. Legal services provided after this point attract the standard 20% VAT rate.

Is asylum legal work included in the £90,000 VAT registration threshold?

No, asylum legal work is not included when calculating your taxable turnover for the £90,000 VAT registration threshold. Because legal services for asylum seekers are classified as "outside the scope" of UK VAT (due to the client's place of belonging being their country of origin), this income is excluded from the calculation of your "taxable turnover." HMRC defines "taxable turnover" as the total value of everything you sell that is not exempt or outside the scope. Included in the threshold are standard-rated supplies (20% VAT), reduced-rated supplies (5% VAT), and zero-rated supplies (0% VAT). Excluded from the threshold are outside the scope income, exempt supplies, and disbursements paid on behalf of a client. If your total turnover (including asylum work) exceeds £90,000 but your taxable turnover remains below it, you do not need to register, though it is recommended to keep clear records to prove to HMRC why you have not registered if they query your accounts. For official verification, see the HMRC guide on when to register for VAT.

Is legal aid for asylum exempt from VAT?

Yes, for clients without a right to stay, Legal Aid Agency accounts are typically paid as VAT-free or outside the scope.

Need Help with VAT Compliance?

Our specialist accountants can help law firms navigate VAT requirements for immigration and asylum work.