Quote Originally Posted by bammer View Post
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.