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When you make payments on behalf of your customers, for goods or services received and used by them, you might be able to treat these payments as ‘disbursements’ for VAT purposes. However, this is only the case if all of the following criteria are met:

1) The company was acting for their client when making the payment to the third party;

2) The client:
a. Actually received and used the goods or services provided by the third party;
b. Was responsible for paying the third party;
c. Authorised the company to make the payment on their behalf;
d. Knew that the goods or services the company paid for were to be provided by a third party

3) The outlay is separately itemised when the company invoices the client;

4) Only the exact amount paid to the third party is recovered from the client;

5) The goods or services that the company pay for are clearly additional to the supplies which the company makes to the client on its own account.

HMRC manual about the disbursements.

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