The VAT implications of acting as an agent is a common issue for clients as this can be actioned in multiple ways, with distinct VAT treatments.

For VAT purposes, an agent will be involved in two distinct supplies; the supply of their own services to the principal for which they charge a fee, in addition to the supply made between the principal and the third party. This can be undertaken on a disclosed or undisclosed basis.

Businesses acting as a disclosed agent would only take a minor role in a transaction between the principal and third party. Under this arrangement, the agent would not be responsible for accounting for VAT on any services provided by the principal as its sole supply would be to the principal itself.

An undisclosed agent takes part in a supply of goods or services while acting in their own name on behalf of the principal. The sale of goods or services by an undisclosed agent is treated as a simultaneous supply to, and by, the agent, and the agent is responsible for accounting for VAT on the onward supply to the end customer.

It is important for agents to consider, prior to making supplies of this nature, whether they intend to act in a disclosed or undisclosed capacity and the obligations this gives rise to. Furthermore, it is necessary to ensure that, once this decision has been made, contractual terms and other relevant documents (invoices/receipts, advertising literature, etc.) reflect this intention.

To discuss the implications of acting as an agent, please call our free VAT helpline on 0161 477 6600 for expert advice.