[Question] VAT Question

[Moriarty]

Any input on this question appreciated:

I have a company paying an invoice from a supplier on behalf of a third party company and wish to recover the invoice total only from the third party. All three companies are vat registered and vat is charged on the supplier invoice. Do I claim the input vat on payment of the invoice and must I charge vat when I re-invoice the third party? The third party company is cash strapped, hence the transaction.

Edit: the invoice is vat compliant for invoices > R5000 and is made out to the paying company not the third party company.

[Moriarty]

I have the answer:

"In the case of an agent receiving supplies/making payment for or on behalf of a principal, the liability for submission of the VAT return and for payment of the tax rests with the principal. Where the supply is a taxable supply and the agent is a vendor, the agent may nevertheless receive tax invoices, debit notes or credit notes for such supply, as if the supply had been made to him for his own benefit. However, it is the principal that must deduct input tax. The agent is merely receiving VAT-related documents on the principal’s behalf.

The agent is to maintain sufficient records to enable the name and address and VAT registration number of the principal to be ascertained in respect of the supplies received on behalf of the principal.

In addition, the agent is required to ascertain and notify its principal of the details listed below, within 21 days of the end of the calendar month during which the supply is received –

a description of the goods or services supplied;
the quantity or volume of the goods or services supplied; and
either
o the value of the supply, the amount of the tax charged and the consideration for the supply;
or
o where the amount of tax charged is calculated by applying the tax fraction to the consideration, the consideration for the supply and either the amount of the tax charged, or a statement that it includes a charge in respect of the tax and the rate at which the tax was charged."