Agent versus principal VAT for influencer agencies

VAT is charged on the value of a taxable supply. The central question in any agency arrangement is: who is actually supplying the service to the brand — the creator, via the agency merely arranging it, or the agency itself, having in effect bought the service in and sold it on?

Where an agency acts purely as agent, it is helping two parties, the brand and the creator, transact with each other directly. The creator supplies the content or endorsement to the brand, the brand pays for that service, and the agency's own supply is the introduction and management service, charged as commission. VAT, where applicable, is charged by the creator on the full brand fee and separately by the agency on its commission.

Where an agency acts as principal, it is treated as receiving the creator's service and then supplying its own version of that service on to the brand. In that structure, the creator invoices the agency (not the brand) for their fee, and the agency invoices the brand for the full campaign value, accounting for VAT on that full amount if it is VAT registered.

This distinction is not just a paperwork choice — HMRC expects the VAT treatment to reflect the real commercial and contractual relationship. Relevant factors include whose name is on the contract with the brand, who carries commercial risk if the brand does not pay, who has authority to agree deliverables, and how the money actually flows.

Getting this wrong in either direction causes real problems. Treating a principal arrangement as agent-only can understate VAT due on the full deal value. Treating a genuine agency arrangement as principal can needlessly inflate turnover figures and create confusion about who the creator's real customer is for their own invoicing.

The turnover that counts toward the VAT registration threshold differs sharply between the two models. An agent only counts its commission income toward its own threshold. A principal must count the full value of every deal it processes as its own turnover, which can push an agency over the £90,000 threshold far sooner than the commission-only model would.

For the creator working with an agency, understanding which model applies determines who they invoice, who chases late payment, and whose VAT registration (if any) needs to appear on which invoice — all of which affects their own bookkeeping and VAT return.

A narrower related concept is a genuine disbursement: a cost passed on to the client at the exact amount paid, with no mark-up, where the agency has not actually received or used the item or service itself. True disbursements can be excluded from VAT calculations entirely, but the conditions are strict and this should not be assumed for the whole deal value.

Many agencies use a hybrid book of business — acting as agent for some creators and as principal for others, or even within different deals for the same creator. Each arrangement needs to be assessed and documented on its own facts rather than applying one blanket approach across the whole agency.

Source: Income Tax rates and allowances (gov.uk) · Self Assessment (gov.uk)