7. FUENTES SECUNDARIAS
7.2. TENDENCIAS MUNDIALES
24.1 Note for UK undisclosed agents involved
in domestic supplies
If you are a UK undisclosed agent involved in domestic supplies, the difficulties outlined in this section may not apply and there is no intention to disturb the current commercial arrangements where you may be invoicing your principals for a separate supply of your own services, as described in paragraph 22.6.
However, if you want to, you may adopt the revised VAT treatment set out in this section for your domestic transactions.
24.2 VAT treatment of supplies involving UK
undisclosed agents
24.2.1 Introduction
This section deals with the revised VAT treatment of international supplies of goods or services made through UK undisclosed agents, operated from 1 July 2000. It also gives information on the option which allows UK undisclosed agents involved in domestic supplies also to use the revised VAT treatment.
The revised treatment follows representations from the trade and their advisers, and has been agreed after consultation with members of the VAT Consultative
Committee and the VAT Practitioners Group. The changes put the VAT treatment of UK undisclosed agents on the same footing as that for commissionaires elsewhere in the Community.
The revised policy is intended to ease problems faced by UK undisclosed agents, which are caused by differences between UK common law on agency and Roman civil law concepts, briefly summarised below. The problems arise where undisclosed agents are involved in non-EC or intra-Community supplies.
Undisclosed agents take part in a supply of goods or services while acting in their own name but they are supplying the goods or services on behalf of another. This means the third party to the transaction is unaware of the involvement of an agent.
24.2.2 Problems arising with undisclosed agents
Before the introduction of the revised VAT treatment, there was potential distortion of competition between UK undisclosed agents and commissionaires, who are seen as principals under Roman law in other Member States.
Commissionaires take part in the supply, with their commission included as a mark- up in the price. However, in UK law, there is an underlying supply between the principal and the customer and a separate supply of agents’ services to their
principals. This meant that, unlike commissionaires, UK agents had to charge VAT to their non-EC principals. If the non-EC principal was unwilling to register in the UK to recover this, the agent may have had to bear the VAT cost.
There was also potential for confusion about the place of supply of services. For example:
where undisclosed agents were involved in a supply taking place where the supplier is based, there may have been uncertainty about the place of the onward supply by the agents; and
in the case of services subject to reverse charge, there may have been uncertainty about who should account for the reverse
charge.
Different values of supplies through UK undisclosed agents and commissionaires resulted in difficulties and mismatches on EC Sales Lists and declarations made for the purposes of international trade statistics (Intrastat).
24.2.3 The revised VAT treatment
The revised treatment applies only to supplies made on or after 1 July 2000. From this date, agents involved in non-EC or intra-Community supplies, who bring
themselves within the terms of section 47 VAT Act 1994 by acting in their own name, are treated as principals for VAT purposes and seen as taking a full part in the
underlying supply of any goods or services.
Consequently, as the agent is taking a full part in the supply, they are no longer recognised as making a separate supply of their own services to their principal and the commission they retain is seen as subsumed in the value of the onward
This revised treatment is for VAT purposes only. It has no impact on the legal status of agents or the way they are treated for the purposes of other taxes or legislation.
24.2.4 Impact of the revised VAT treatment
(a) Goods imported or acquired into the UK
Note: For the purposes of the following illustration, the price paid by the final customer is £100; the commission retained by the agent is £20; and the money passed back to the principal is £80: all net of VAT.
If you are a UK undisclosed agent… Then the VAT value at…
importing goods on behalf of a non-EC principal
importation is decided by the Customs rules as previously, and will not change. acquiring goods from a principal in
another Member State
acquisition is £80 by virtue of section 20(3) VAT Act 1994 based on the value of the invoice raised by the EC principal to you. You are responsible for Intrastat declarations and must account for acquisition tax.
As a UK undisclosed agent that is treated as a principal under the revised VAT treatment, you will be entitled to recover import/acquisition VAT, subject to the normal rules. You will then:
make an onward supply in your own name to your customer for £100; and
account for any output tax due.
Your commission of £20 will be seen as subsumed in the value of your onward supply of the goods, and you are no longer regarded as making a separate supply of your own services to your non-UK principal.
You may treat costs incurred in the UK, such as warehousing and handling, as supplies to you and you may recover the input tax on them, subject to the normal rules.
(b) International services
If you are a UK undisclosed agent involved in international services and you act in your own name under section 47(3) VAT Act 1994, you are treated as a principal in the same way as elsewhere in the EC.
The services are seen as supplied to you as though you are a principal, and supplied on by you. This means that you will be treated as taking a full part in the supply chain.
As in the case of imported goods above, your commission is seen as subsumed in the value of the onward supply. You are no longer regarded as making a separate supply of your own services to your principal.
From 1 July 2000, Section 47(3) applies in this way in all cases where agents act in their own name in relation to international services. It applies to services being supplied both to and from the UK.
If you make supplies of arranging or facilitating a supply of services, see Notice 741A Place of supply of services.