As an agent, you can act in own name (as an undisclosed agent) or in the name of its principal (as a disclosed agent).
The VAT treatment of the sales depends on the type of agency applying as described in HMRC’s VAT Notice 700: The VAT Guide at sections 22.5 (disclosed agent) and 22.6 (undisclosed agent).
For a disclosed agent, there should be an invoice from the principal to the customer. VAT is then the responsibility of the principal. It should be clear that you are selling as Agent, then output tax is due only on your commission.You should draft a simple agreement between the parties; and make sure your marketing or website indicates that the sale is on behalf of a third party.
To quote VAT Notice 700 at section 22.5 (“Agents acting in the name of their principals”):
“As an agent, you may sometimes take a minor role in a transaction, and simply introduce your principal to potential customers or suppliers (third parties). At other times you may be more closely involved. You might:
– receive or deliver goods;
– hold a stock of goods for your principal; or
– make or receive payment.
“However, provided that the invoicing for the supply is between the principal and the customer, the only supply for VAT purposes being made by you will be the provision of your services to your principal.”
For an undisclosed agent, where you could sell as Principle on a Sale or Return basis; you would be liable to output tax on the full selling price. Section 22.6 of the VAT Guide says:
“If you issue an invoice in your own name for a supply of goods which you arrange for your principal then for VAT purposes only, you must treat the transaction as though it was both a supply to you and a supply by you.”