VAT tripartite supplies—third party consideration
Produced in partnership with Matthew Wentworth-May of Winslows
VAT tripartite supplies—third party consideration

The following Tax practice note produced in partnership with Matthew Wentworth-May of Winslows provides comprehensive and up to date legal information covering:

  • VAT tripartite supplies—third party consideration
  • The supplier’s liability to account for VAT on third party consideration
  • Third party subsidy as all or part of the consideration
  • Recovery of VAT as input tax in tripartite arrangements
  • What must the paying party receive in order to recover input tax?
  • Where are we now?
  • Implications for the recovery of VAT on professional fees?

IP COMPLETION DAY: 11pm (GMT) on 31 December 2020 marks the end of the Brexit transition/implementation period entered into following the UK’s withdrawal from the EU. At this point in time (referred to in UK law as ‘IP completion day’), key transitional arrangements come to an end and significant changes begin to take effect across the UK’s legal regime. This document contains guidance on subjects impacted by these changes. Before continuing your research, see Practice Note: What does IP completion day mean for Tax?

UK VAT is charged on a supply of goods or services made (or treated as made) in the UK at a rate of, usually, 20% of the value of the supply. Although it is the person supplying the goods or services that is required to account to HMRC for the VAT, the cost of the VAT is usually passed on to the recipient of the supply. A VAT-registered recipient of a supply can therefore typically claim (or recover) the amount in respect of VAT that it has paid provided, broadly, that such supply is directly linked to its VATable business, ie it is a VAT cost of the recipient in providing its own VATable supplies of goods or services.

Normally, a supply of goods or services involves two parties—the supplier and the customer. Sometimes, a third party pays an amount to the

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