Section 49 of the VAT Act
A representative or agent should be registered if he is receiving monies on behalf of his principal which meet or exceed the registration threshold. The agent shall be liable for payment of any “tax, additional tax, penalty or interest chargeable under this Act in relation to such monies or transactions as though such liability had been incurred by him personally, but such liability shall be deemed to have been incurred by him in his representative capacity only.”
Take note of the last statement that such liability is in his representative capacity only. If negligence is not noted from the agent, payment of any tax should be recovered from the assets of the principal held in the agent’s possession. The said tax shall not be recovered from the Public Officer but the Principal Company.
Any tax paid by the representative tax payer shall be recovered from the company that he represents. The following situations hold the agent responsible for payment of tax in his personal capacity:
- i) He alienates, charges or disposes of any money received or accrued in respect of which tax is chargeable.
- ii) Disposes of funds held on behalf of his principal knowing that there is an outstanding tax obligation or after knowing of a tax obligation.
The above two situations are the only instances that holds the agent personally responsible for payment of taxes.
Note that the Act is silent on the issue of the agent failing to charge a particular tax. In your case if the agent is not charging Informal Traders Presumptive tax, he can still recover that from your monies in his possession.
Section 50 of the VAT Act empowers the Commissioner to attach any of your property that is held by the agent to recover any outstanding taxes.
Document Compiled by tax expert: P. Gurumani
MD at Misfort Tax Consultancy