In Bryn Williams v HMRC [2019] TC06963 the FTT held that a taxi firm owner should have registered for VAT; he was not acting as an agent for his drivers when contracting with local authorities.

Agents can act in two ways and the way that they act will affect the VAT treatment:

  • Where the agent acts in the name of the principal:
    • If invoices are between principal and customer, then the agent is ignored for the supply, it is a supply directly from the principal for VAT purposes.
  • Where the agent acts in their own name:
    • The supply from principal to customer is treated as made by principal to agent and by agent to customer for VAT purposes.

Mr Williams operated a taxi business part of which involved providing taxis to local authorities. 

  • Mr Williams tendered for the contracts with the local authorities.
  • Under a JV contract the service was provided by a pool of drivers, some owned their vehicle and some drove vehicles owned, insured and licensed by Mr Williams. He took management fees from the drivers which included rental fees for those driving his vehicles.
  • No specific driver was identified when the contracts were made with the local authorities. The work would be offered to a driver, to the rest of the pool if he declined and then to other local taxi firms. 
  • The local authorities paid Mr Williams. He paid the drivers after deducting his fee. If they failed to pay neither Mr Williams nor the drivers were paid.
  • The drivers were free to undertake other private hire work.
  • HMRC issued VAT assessments asserting that Mr Williams had supplied the taxi services to the local authorities for consideration, taking him over the VAT threshold and meaning he should have registered for VAT. He appealed.

The FTT dismissed the appeal; Mr Williams was not acting as agent for the drivers in making a contract with the local authority, he was making a taxable supply to the authority:

  • At the time the contract with the local authority was entered into, no driver had been identified to perform the contract so there was no particular person who could be said to be the principal for whom Mr Williams was acting and who was bound by his actions.
  • The later identification of the driver may have created an obligation on the driver to undertake the work, but that obligation can have been owed only to Mr Williams.
  • The drivers could not be taken as supplying services in consideration for payments from the authority; there was no taxable supply by them to the local authority. 

Links to our guides:

Agents and principals 

Registering for VAT 

How to appeal an HMRC decision

External link:

Bryn Williams v HMRC [2019] TC06963

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