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HMRC internal manual

VAT Taxable Person Manual

Agency and disbursements: how agents should account for VAT - Section 47 of the VAT Act 1994: supplies by undisclosed agents


There are significant differences between UK common law on agency and the equivalent Roman civil law concepts that apply elsewhere in Europe. Under UK law, the involvement of an undisclosed agent does not alter the supply position of the underlying goods or services. The supply remains between the person actually providing the goods or services and the person receiving them. There is also a further supply of services by the agent to their principal which, depending on the circumstances, can be either person providing the goods or services (as a selling agent) or the person receiving them (as a buying agent).

This contrasts with the Roman law position under which the undisclosed agent (or ‘commissionaire’) acts as a principal. As a result they are treated as buying in and selling on the goods or services in their own right. What would otherwise be their commission represents the mark-up, or profit margin, and determines the difference between purchase and selling price. There is no additional supply of agency services to the person on whose behalf they are acting.

Cross-border supplies

This difference in legal status increasingly led to practical difficulties for UK undisclosed agents where the underlying supply was anything other than domestic. For example supplies involving goods imported or exported to or from the UK. Likewise intra-EU movements between Member States. They were similarly disadvantaged, in comparison with their commissionaire counterparts, where the underlying supply involved cross-border services.

It was for this reason that revised UK VAT treatment was agreed in 2000. As a result, UK undisclosed agents, that is those subject to section 47 through acting in their own name, are treated solely as principals (with no separate supply of agency services) in the same way as commissionaires. This treatment is compulsory.

Domestic supplies

The treatment is not compulsory for UK agents acting in an undisclosed capacity where the underlying supply of goods or services is wholly domestic. However, they may, if they wish, adopt the same arrangements.


Treating the agent as a principal in these circumstances applies for VAT purposes only. It has no other impact on their legal status or the way they are treated in applying other taxes or legislation. Further details about the VAT accounting consequences can be found in Notice 700 (The VAT Guide) .