A disbursement is a form of
payment
A payment is the tender of something of value, such as money or its equivalent, by one party (such as a person or company) to another in exchange for goods or services provided by them, or to fulfill a legal obligation or philanthropy desir ...
from a public or dedicated fund. Alternatively, it means a payment made on behalf of a client to a third party, for which reimbursement is subsequently sought from the client.
It is a term most commonly used by
solicitor
A solicitor is a lawyer who traditionally deals with most of the legal matters in some jurisdictions. A person must have legally defined qualifications, which vary from one jurisdiction to another, to be described as a solicitor and enabled to p ...
s in the UK to refer to payments which they have made or will make to third parties in connection with the matter they are dealing with on behalf of the client. Section 67 of the
Solicitors Act 1974 refers to disbursements as “costs payable in discharge of a
liability properly incurred by
he solicitoron behalf of the party to be charged with the bill”. These may include court fees,
counsel
A counsel or a counsellor at law is a person who gives advice and deals with various issues, particularly in legal matters. It is a title often used interchangeably with the title of ''lawyer''.
The word ''counsel'' can also mean advice given ...
's fees, fees for medical or other expert reports or search fees in a property transaction.
Disbursements paid by an
undertaker
A funeral director, also known as an undertaker or mortician (American English), is a professional who has licenses in funeral arranging and embalming (or preparation of the deceased) involved in the business of funeral rites. These tasks o ...
on behalf of a bereaved family generally include
cemetery
A cemetery, burial ground, gravesite, graveyard, or a green space called a memorial park or memorial garden, is a place where the remains of many death, dead people are burial, buried or otherwise entombed. The word ''cemetery'' (from Greek ...
or
crematorium
A crematorium, crematory or cremation center is a venue for the cremation of the Death, dead. Modern crematoria contain at least one cremator (also known as a crematory, retort or cremation chamber), a purpose-built furnace. In some countries a ...
costs, costs for religious worship and any newspaper announcements.
For
VAT purposes, disbursements are defined more narrowly and distinguished from recharges like travelling expenses and postage, which are incurred by the business for its own requirements rather than for the customer. VAT is applied to recharges, but not to disbursements.
[HMRC]
VAT: costs or disbursements passed to customers
published 1 July 2014, accessed 6 November 2016
References
Taxation in the United Kingdom
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