Supply and consideration ― disbursements and recharges

Produced by a Tolley Value Added Tax expert

Value Added Tax

Guidance

This guidance note examines the topic of disbursements and recharges 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 V3.159.

Disbursements

If certain conditions are met, payments that are made by a business to a third party on behalf of a customer can be excluded when calculating VAT due on the business’ supplies to its customers. These payments are known as disbursements.

In other words, a disbursement is money paid by an agent to a third party on behalf of its client whilst acting as the client’s agent.

By way of example, a business may provide standard-rated services to its customer for £100 (excluding VAT). It may also pay a third party £10 by way of a disbursement on behalf of its customer. The business would charge VAT of £20 (£100 x 20%) on its services but it will not be obliged

Access this article and thousands of others like it
free for 7 days with a trial of Tolley+™ Guidance.

TAKE A FREE TRIAL

Popular Articles

Employment Tax

Company cars

Company carsIntroductionCompany cars are one of the most common taxable benefits. The rules for calculating the benefit are complex, and the reporting requirements are more onerous than most benefits. Company cars are covered by very specific legislation. Detailed guidance on each of the following

14 Jul 2020 11:15 | Produced by Tolley Read more

Owner-Managed Businesses

Relief for employee share schemes

Relief for employee share schemesRemuneration expenses are generally deductible for corporation tax purposes as they are considered to be incurred wholly and exclusively for the purposes of the trade. However, expenses relating to shares are usually classed as capital and are therefore not

14 Jul 2020 13:21 | Produced by Tolley Read more

Employment Tax

Incentives, awards and prizes

Incentives, awards and prizesIntroduction ― incentives, awards and prizesEmployers may use a variety of methods to reward and encourage employees in their work. These are commonly known as incentives, awards or prizes. For the purposes of this note, the term ‘award’ will be used to cover all

14 Jul 2020 11:57 | Produced by Tolley Read more

UU��ֱ��