Supply and consideration ― agents, agency and principals

Produced by a Tolley Value Added Tax expert

Value Added Tax

Guidance

This guidance note examines the topic of agents (agency) and principals for VAT purposes.

For an overview of supply and consideration generally, see the Supply and consideration ― overview guidance note.

For in depth commentary on the legislation and case law in this area, see De Voil Indirect Tax Service V3.221.

Meaning of agent and principal

Neither the term agent nor the term principal is defined in the VAT legislation. However, HMRC will broadly use the term agent to describe a person who acts for or acts for someone else with the consent of both parties. That ‘someone else’ is the principal. An agent arranges supplies of goods or services by, or to, its principal.

It is worth noting that a person who describes themselves as an agent may nonetheless be acting as a principal within the VAT meaning of the term.

According to HMRC, to act as an agent, a business must have

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