Where three persons are involved in a deal (a ‘tripartite transaction’), in relation to output tax there can be problems with:

1identifying the person who may be liable to account for output tax on a supply; and

2calculating the amount which is VATable.

Example: Types of tripartite transaction

Mr Payerr obtains goods or services from Mr Tenn and pays £100. Mr Tenn receives the £100 and retains £10 while paying £90 to Mr Ninetee. The transaction could involve one of the following arrangements:

1Mr Ninetee supplies the goods or services to Mr Payerr for £100. Mr Tenn is the agent of Mr Ninetee and charges a fee of £10;

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