V3.159 Value—disbursements


Directive 2006/112/EC provides that the 'taxable amount' (ie value) shall not include amounts received by a taxable person from his customer as repayment of expenditure incurred in the name and on behalf of the customer and which are entered in his books in a suspense account1.

HMRC allow payments to third parties to be treated as disbursements if specified conditions are met. Where this is so, the amounts concerned are excluded when calculating the tax due on the trader's supply to his client2.

In considering agency supplies it is necessary to distinguish between disbursements proper and certain charges which are sometimes described as such. A disbursement is simply money paid by an agent to another party on behalf of his client while acting as the client's agent. HMRC allow a person to treat a payment to a third party as a disbursement if3:


    •     he acted as the agent of his client when he paid the third party


    •     his client actually received and used the goods or services provided by the third party


    •     the client was responsible for paying the third party


    •     the client authorised him to make the payment on his behalf


    •     the client knew that the goods or services paid for by him would be provided by a third party


    •     the payment made by him will be separately itemised on his invoice to the client


    •     he recovers only the exact amount which he paid to the third party, and



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