Andrew Needham looks at the difference between a disclosed and an undisclosed agent.
When a business sells through an agent there are basically two types of structure that can be used; a disclosed agent or an undisclosed agent.
With a disclosed agent, the purchaser knows they are buying from the business and the ‘agent’ is not a party to the transaction. The VAT consequences are the same as a ‘normal’ sale, the invoicing is from the business to the client and the business is charged a separate commission by its agent. This commission will normally be VATable and the business can recover this VAT in the normal way.
With an undisclosed agent, the purchaser thinks they are buying from the agent; in other words, he is acting in his own name, and it is the agent that will issue the sales invoice and account for the VAT on the
