VAT & SARS

**Dave A** · 08-Mar-12, 06:08 PM

Originally Posted by Cecilia23

At the moment we are looking at getting a BBEEE partner, he is working on projects allready and asked us to make out invoices obo him. the problem i have with this, is what is our liabillity regarding his VAT that is on the invoice that we make out in his name? and if it is not our responsibility how do i put it in words to explain that the vat is his responsibility

About the best way I can think of approaching this is - Who's VAT number is going on the invoice as the supplier of goods and/or services?

**BusNavig8** · 09-Mar-12, 07:13 AM

It should be handled as follows : you invoice the client, if they are vat vendors then you charge vat. Then the BBBEE partner to be invoices you and you hay him. If he us a vat vendor he issues you a tax invoice if not just an invoice which you would pay in the usual way. Remember that you may incur a tax problem if he is not regarded as an independent trader and thus have to deduct PAYE from the invoice.

**bammer** · 09-Mar-12, 07:54 AM

Assuming all parties are registered VAT vendors and subequent to entering into an agency agreement, you can, in terms of section 54 of the VAT Act, act on behalf of the partner. Acting as agent, you are entitled to issue and receive tax invoices as if the supplies were made by you (and to you) and not the partner (principal). Certain requirements have to be met (see s. 54(3)), including, notifying the principal (within 21 days) of its VAT liability. Note that you cannot claim input tax on behalf of the principal and should not account for output tax in respect of any tax invoices issued by you on his behalf.

**BusNavig8** · 10-Mar-12, 07:23 AM

Originally Posted by bammer

Assuming all parties are registered VAT vendors and subequent to entering into an agency agreement, you can, in terms of section 54 of the VAT Act, act on behalf of the partner. Acting as agent, you are entitled to issue and receive tax invoices as if the supplies were made by you (and to you) and not the partner (principal). Certain requirements have to be met (see s. 54(3)), including, notifying the principal (within 21 days) of its VAT liability. Note that you cannot claim input tax on behalf of the principal and should not account for output tax in respect of any tax invoices issued by you on his behalf.

In these cases an agency agreement is rarely entered into and the definition of an agency agreement in terms if the original post as I read it was not the intention of the parties, the intention of the parties was something entirely different. If he were a BBBEE partner would he be entitled to the VAT on the income he generated? The section of the VAT act is intended for agency agreements where they will be intended to stay as such. It can if course be argued that the partnership fell through but in most cases I guarantee you that there is no agreement in place.