Q&As

A contract provides that consideration will be exclusive of VAT which shall where it is chargeable be paid in addition on receipt of a valid VAT invoice issued to the payer. What will be the VAT consequences if the consideration is to be paid by a third party?

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Published on LexisPSL on 27/04/2017

The following Tax Q&A provides comprehensive and up to date legal information covering:

  • A contract provides that consideration will be exclusive of VAT which shall where it is chargeable be paid in addition on receipt of a valid VAT invoice issued to the payer. What will be the VAT consequences if the consideration is to be paid by a third party?

In answering this Q&A, we assume that all parties belong in the UK.

It is standard practice for commercial contracts to include a clause providing that, if the supply to which the contract relates is chargeable to VAT, VAT will be payable in addition to the consideration set out in the contract. This clause does not determine whether or not VAT is chargeable on the supply. The question of whether VAT is chargeable will be determined by the nature of the goods and/or services being supplied. Most goods and services are standard-rated for VAT purposes but some are zero-rated, exempt, reduced-rated or outside the s

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