Who is the recipient?

Produced by Tolley
Who is the recipient?

The following Value Added Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Who is the recipient?
  • Viability studies
  • Service companies
  • Issuing shares
  • Redrow
  • Third party legal costs

IP COMPLETION DAY: 11pm (GMT) on 31 December 2020 marked the end of the Brexit transition / implementation period entered into following the UK’s withdrawal from the EU. At this point in time, key transitional arrangements came to an end and significant changes began to take effect across the UK’s VAT and customs regime. This document contains guidance on subjects potentially impacted by these changes. Before continuing your research, see the Brexit — overview guidance note.

This guidance note provides an overview of the principles regarding who is the true recipient of a supply, because the party who pays for the supply may not necessarily be the recipient of the goods / services supplied. It is very important that the parties determine who received the goods / services supplied, asthe recipient is the only party entitled to recover VAT incurred.

Some typical examples of situations where the recipient of the services may be unclear are explained below together with HMRC or the courts’ view on who is the recipient of the supply.

Viability studies

Viability studies are usually requested by a bank or other financial institution considering lending money to, or investing in, a client. Typically, these types of studies are undertaken when a client requires a new loan or extension to an existing loan, or if the borrower has gone into receivership. It can be difficult to decide in these circumstances who is the ‘true’ recipient of the supply. For details, see the Holding companies ― who is the recipient of the supply? guidance note.

Service companies

Service companies are often set up in order to provide services to a client using a single employee (contractor). The contractor only provides services to the client and would be viewed asbeing employed by the client if the services were not provided by a service company. This arrangement enables the client to make payments to the service company, rather than the individual, without being required to deduct PAYE or

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