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

Value Added Tax

Exporting goods ― proof of export

Exporting goods ― proof of exportIn addition to the requirements laid down in the Exporting goods ― overview guidance note, businesses intending to zero-rate exported goods must hold satisfactory evidence that the goods have been delivered to a destination outside of the UK. If satisfactory evidence

15 Dec 2020 14:02 | Produced by Tolley Read more

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

Repairs and renewals

Repairs and renewalsThe key consideration in determining whether expenditure on repairs and renewals is allowable as a deduction for tax purposes is whether it is capital or revenue in nature. In some cases, it can be relatively straightforward to identify revenue repairs. HMRC provides the

14 Jul 2020 13:23 | Produced by Tolley Read more

��Ƶ