FTT All Answers Limited (AAL) – whether it operated as an agent with VAT due only on the commission element of payments received

The case of All Answers Ltd v HMRC [2023] UKFTT 737 (TC) (23 August 2023) highlights the importance of considering both contractual terms and economic and commercial reality in VAT analysis.
The case involved an internet-based business that provided essay writing services through third-party writers.
The company argued that it acted as an agent and was only required to account for VAT on its share of the payment received from customers.
However, the First-tier Tribunal (FTT) held that the company was acting as principal and was therefore required to account for VAT on the full payment received from customers. The FTT noted that even if the revised contracts had imposed core obligations on the third-party writers, it would have been inconsistent with economic and commercial reality.
The case serves as a reminder that contractual terms alone may not be sufficient to alter the core legal obligations of a company in VAT analysis.

Taxable transaction