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Where Taxpayers and Advisers Meet

Is this a secret agent?

pawncob
Posts: 4507
Joined: Wed Aug 06, 2008 4:06 pm
Location: West Sussex

Is this a secret agent?

Postby pawncob » Tue Jul 28, 2020 3:55 pm

I act for a sports club, which took advantage of the covid shut down to refurb the premises. A member supplied materials, which he purchased through his trade account, specifically for this project. He's not VAT registered and the invoices are made out to him personally. The club has paid him for the materials. Is he acting as an agent, and can the club reclaim the input tax if he supplies the VAT invoices?
With a pinch of salt take what I say, but don't exceed your RDA

Trevor S
Posts: 59
Joined: Tue Jan 01, 2019 12:37 am

Re: Is this a secret agent?

Postby Trevor S » Tue Jul 28, 2020 10:35 pm

The relevant law is in s47(2A) of the VAT Act:
"Where ... goods are supplied through an agent who acts in his own name, the supply shall be treated both as a supply to the agent and as a supply by the agent."

Therefore, the member has received the supply of goods and is making an onward supply to the club. Not only is the club unable to reclaim VAT, there's the risk that the transaction could count towards the VAT registration threshold for the member's business.

pawncob
Posts: 4507
Joined: Wed Aug 06, 2008 4:06 pm
Location: West Sussex

Re: Is this a secret agent?

Postby pawncob » Wed Jul 29, 2020 11:06 am

That's how I read it as well, but could the agent be acting in the name of his principal? This would necessitate the seller being aware that the agent was acting in the principal's name, and issuing an invoice in the principal's name. It's probably too late to ask for an amended invoice, but it's worth a try.
With a pinch of salt take what I say, but don't exceed your RDA

Trevor S
Posts: 59
Joined: Tue Jan 01, 2019 12:37 am

Re: Is this a secret agent?

Postby Trevor S » Wed Jul 29, 2020 12:26 pm

You could try, but if it's the member's trade account, there may be something in the account contract between the seller and member that specifies that goods are supplied to and invoices are issued to the member.


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