Referal fees and VAT

[duncan drennan]

How does VAT work in the case of referral fees?

Say for example I made an arrangement where I paid a referral fee for every customer that comes through a certain channel. So customer comes to me (via channel) and we do business and customer pays me R1140 (R1000 + VAT). Let's say the referral fee is R100. Does the referring body make out an invoice and charge VAT on that, or would I just pay them the R100?

I would think that I would just pay the R100, seen as VAT is levied on the end customer.

[Dave A]

I would think that I would just pay the R100, seen as VAT is levied on the end customer.

Without a tax invoice, that would seem to be the way to go. I don't think the provisions for claiming deemed VAT applies.