Examination of a selection of solicitors' bills reveals that many firms are recovering a wide range of expenses paid on behalf of clients.

Some of these expenses might be regarded as part of the ordinary overhead of running a legal practice.

Unfortunately, the rules defining the categorisation of such expenses are technical and complex.The starting point is the rule set out in the Solicitors Act 1974.

Disbursements are explained in s.67 as being 'costs payable in discharge of a liability properly incurred by ...[a solicitor]...on behalf of the party to be charged'.

Strictly speaking, it is unlawful to attempt to treat as a disbursement anything other than the precise amount of a liability which a solicitor has incurred to a third party; all other charges are profit costs.HM Customs & Excise applies an even more restrictive definition of a 'disbursement' (see [1990] Gazette, 21 February, 14).

It is regarded as essential that the supply of goods or services for which the solicitor has paid is actually received by the client.On this basis general charges which are not for services supplied to clients, but for services supplied to and paid for by the solicitor to enable him or her to provide services to the client (for example, travelling expenses and telegraphic transfer fees) cannot be treated as disbursements.Charges which are not disbursements are profit costs.

The ordinary charges made for professional services comprise the major component in profit costs.

These charges reflect the time spent in attending to clients' affairs and the other factors listed in the Solicitors (Non-Contentious Business) Remuneration Order 1994.Some firms designate profit costs other than charges for professional services as 'sundry charges'.

Such charges are a convenient way of recovering overheads which cannot correctly be described as disbursements.

A familiar example will be photocopying charges.

Charges made by solicitors for photocopying in the office, although sanctioned by the court, are not technically disbursements because no payment is made to a third party corresponding to the amount charged to clients.

The am ount paid to an outside photocopying bureau, on the other hand, is a disbursement.Disbursements fall into two categories: those upon which VAT is charged and those upon which no VAT is charged.

The first category is the residual category; disbursements upon which no VAT is charged are broadly restricted to fees of an official character which are regarded as being for supplies made directly to clients.To facilitate categorisation, here are lists of common types of expenses.

The principles underlying these lists comply with the Supreme Court Taxing Office Practice Direction (Taxation: VAT) No.1 of 1994.1.

Sundry charges (taxable): photocopies made in the office, binding charges, telephone calls, telephone conference fees, fax charges, postage etc, bank charges for supplying a draft, telegraphic transfer fees, CHAPS fees, travelling expenses (including taxi and train fares), secretarial overtime, recovering files from storage and Lexis charges.2.

Disbursements (taxable): courier charges, photocopying bureau charges, search agent charges, counsels' fees, local agents' charges, landlords' registration fees, interpreters' fees, translation fees and sheriffs' fees.3.

Disbursements (non-taxable): court fees on writs, Land Registry fees, company search fees, annual return fees, stamp duty, local authority search fees, local land charges searches and commissioners' fees on oaths.Errors in these lists are my responsibility but I have been informed that my analysis accords with the current Law Society thinking on this topic.