Introduction
Some of the cheapest marks in VAT are not in the calculations. They are in four short sections of the Value Added Tax Act, 2013 (Act 870) that tell you who made a supply when the commercial reality looks like nobody did. In November 2020 ICAG’s Principles of Taxation paper gave three marks each for repossession, a cancelled lay-away deposit, and agent versus auctioneer. The Examiner’s Comments said candidates answered the principles on repossession, goods on deposits and goods supplied by agents poorly. In March 2025 a lay-away question returned for three more marks. By the end of this article you will know each rule, the trap in each, and the four-step format that wins the marks.
What Is a “Deemed Supply”?
Section 20(1) defines a supply of goods as an arrangement under which the owner of goods parts with possession of the goods, by way of sale, barter, lease, transfer, exchange, gift or similar disposition. A supply of services is a supply that is not goods or money, such as performing services for another person, making a facility or advantage available, or tolerating a situation or refraining from doing an activity. A deemed supply is an event the Act treats as a supply even though the ordinary definition does not obviously fit. Sections 21, 22, 26 and 32 do this for four situations.
Section 21: Repossession
The Act says goods repossessed under a credit agreement are treated as supplied by the debtor to the person exercising the right of repossession. Where the debtor is a registered person, the supply is made in the course or furtherance of the debtor’s taxable activity, unless the goods did not form part of the assets held or used in that activity.
Exam trap: writing that the seller who repossessed made the supply. Say instead: the debtor is the deemed supplier, and state whether the debtor is registered.
Sections 22 and 26: Lay-Away and Deposits
Where a lay-away agreement is cancelled and the seller retains an amount paid, the cancellation is a supply of services by the seller (s.22(1)). A deposit, other than on a returnable container, is treated as a supply when it is forfeited (s.26(1)). A deposit is money or property received to secure performance, applied to the price or returned if the depositor performs, and ordinarily forfeited if the purchaser defaults (s.26(2)).
In the November 2020 facts, goods costing GH¢12,000 were reserved and a GH¢2,000 deposit was paid. The deal was cancelled by mutual consent. The goods were never released, so there is no supply of the goods. The retained deposit is the supply.
If you want to see this explained visually with worked examples, watch the full YouTube lesson for this topic. Bill walks through every point step by step.
Section 32: Agents and Auctioneers
A supply made by an agent for a principal is a supply by the principal (s.32(1)). That does not extend to the agent’s own service to the principal, the commission (s.32(2)). At an auction, the supply is treated as made by the auctioneer (s.32(3)). So: agent sale → principal is the taxable person; auction → auctioneer is the taxable person; commission → the agent’s own supply.
Section 20(3)–(4): Going Concern
Disposing of a taxable activity, or a part capable of being operated separately, as a going concern is a supply of goods. It is a going concern where the goods and services needed to continue the activity are supplied to the transferee and the transferor carries on the activity up to the time of transfer. The November 2023 marking scheme includes this sentence in its answer on supply of goods, so add it whenever you define the term.
EXAM TIP: Answer in four moves: Rule (the section in your words) → Trigger (the fact in the question) → Consequence (who supplies what, and does VAT arise) → Assumption (registration status, VAT-inclusive or exclusive). Three sentences usually secure three marks.
Conclusion
The deemed supply sections are short, repeatable and predictable. Examiners ask them in small parts, and candidates lose marks by answering from common sense. Learn the direction of each rule: debtor supplies on repossession; seller supplies services when a lay-away is cancelled or a deposit is forfeited; principal supplies through an agent; auctioneer supplies at an auction. Always check the section numbers and the VAT rate structure against the version of the VAT law currently in force before you sit.
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