diff --git a/internal/document/dir_handle.go b/internal/document/dir_handle.go
index 4e2548502..46c738df8 100644
--- a/internal/document/dir_handle.go
+++ b/internal/document/dir_handle.go
@@ -1,10 +1,6 @@
 package document
 
 import (
-	"fmt"
-	"os"
-	"strings"
-
 	"github.com/hashicorp/terraform-ls/internal/uri"
 )
 
@@ -26,8 +22,6 @@ func (dh DirHandle) Path() string {
 // It is however outside the scope of the function to verify
 // this is actually the case or whether the directory exists.
 func DirHandleFromPath(dirPath string) DirHandle {
-	dirPath = strings.TrimSuffix(dirPath, fmt.Sprintf("%c", os.PathSeparator))
-
 	return DirHandle{
 		URI: uri.FromPath(dirPath),
 	}
@@ -39,10 +33,8 @@ func DirHandleFromPath(dirPath string) DirHandle {
 // It is however outside the scope of the function to verify
 // this is actually the case or whether the directory exists.
 func DirHandleFromURI(dirUri string) DirHandle {
-	// Dir URIs are usually without trailing separator already
-	// but we double check anyway, so we deal with the same URI
-	// regardless of language client differences
-	dirUri = strings.TrimSuffix(string(dirUri), "/")
+	// Normalize the raw URI to account for any escaping differences
+	dirUri = uri.MustParseURI(dirUri)
 
 	return DirHandle{
 		URI: dirUri,
diff --git a/internal/document/dir_handle_test.go b/internal/document/dir_handle_test.go
index baba0ce7d..77480193e 100644
--- a/internal/document/dir_handle_test.go
+++ b/internal/document/dir_handle_test.go
@@ -24,6 +24,12 @@ func TestDirHandleFromURI(t *testing.T) {
 				URI: "file:///C:/random/path",
 			},
 		},
+		{
+			RawURI: "file:///C%3A/random/path",
+			ExpectedHandle: DirHandle{
+				URI: "file:///C:/random/path",
+			},
+		},
 	}
 
 	for i, tc := range testCases {
diff --git a/internal/document/handle.go b/internal/document/handle.go
index dfdb40de1..5623b5331 100644
--- a/internal/document/handle.go
+++ b/internal/document/handle.go
@@ -1,10 +1,11 @@
 package document
 
 import (
+	"fmt"
+	"os"
+	"path"
 	"path/filepath"
 	"strings"
-
-	"github.com/hashicorp/terraform-ls/internal/uri"
 )
 
 // Handle represents a document location
@@ -22,13 +23,11 @@ type Handle struct {
 // It is however outside the scope of the function to verify
 // this is actually the case or whether the file exists.
 func HandleFromURI(docUri string) Handle {
-	path := uri.MustPathFromURI(docUri)
-
-	filename := filepath.Base(path)
+	filename := path.Base(docUri)
 	dirUri := strings.TrimSuffix(docUri, "/"+filename)
 
 	return Handle{
-		Dir:      DirHandle{URI: dirUri},
+		Dir:      DirHandleFromURI(dirUri),
 		Filename: filename,
 	}
 }
@@ -39,13 +38,11 @@ func HandleFromURI(docUri string) Handle {
 // It is however outside the scope of the function to verify
 // this is actually the case or whether the file exists.
 func HandleFromPath(docPath string) Handle {
-	docUri := uri.FromPath(docPath)
-
 	filename := filepath.Base(docPath)
-	dirUri := strings.TrimSuffix(docUri, "/"+filename)
+	dirPath := strings.TrimSuffix(docPath, fmt.Sprintf("%c%s", os.PathSeparator, filename))
 
 	return Handle{
-		Dir:      DirHandle{URI: dirUri},
+		Dir:      DirHandleFromPath(dirPath),
 		Filename: filename,
 	}
 }
diff --git a/internal/document/handle_test.go b/internal/document/handle_test.go
index 9612c8501..0115c39a0 100644
--- a/internal/document/handle_test.go
+++ b/internal/document/handle_test.go
@@ -25,6 +25,13 @@ func TestHandleFromURI(t *testing.T) {
 				Filename: "config.tf",
 			},
 		},
+		{
+			RawURI: "file:///C%3A/random/path/to/config.tf",
+			ExpectedHandle: Handle{
+				Dir:      DirHandle{URI: "file:///C:/random/path/to"},
+				Filename: "config.tf",
+			},
+		},
 	}
 
 	for i, tc := range testCases {