V3.127 Identity of supplier

Agency1/employee/related businesses

The identity of the supplier may be unclear where there is, or appears to be, more than one party closely involved in the making of a supply.


Customer A receives goods or services from B, and makes a payment of £100. B retains £30, and pays the remaining £70 to C.

The following scenarios could apply in the above example:


    •     B makes a supply to A for £30; C makes a supply to A for £70. B acts as collection agent in respect of C' supplies.


    •     C makes a supply to A for £100. B acts as agent for C, and charges C a £30 agency fee.


    •     C makes a supply to A for £100. B is employed by C (or provides his services on a self-employed basis) and retains his wage/fee of £30 before paying the remainder to C.


    •     B makes a supply to A for £100, purchasing goods/services as principal from C for £70 in order to make the supply.

Where A, B and C are all taxable persons who are not required to restrict the amount of input tax which they are entitled to recover, the question is often academic; one way or another, VAT of £16.67 will be accounted for as output tax, and claimed as input tax. But where one or more of the parties is not a taxable person, or is partly exempt2, the amount of VAT payable on the transaction will be dependent on the precise

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