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Companies or associations may sometimes be set up to assist other companies within a particular trade by providing discounted goods or a ‘purchasing service� for their members.

»Ê¹ÚÌåÓýapp two most common versions are:

• a company that buys in goods in bulk itself so that it can then supply these on to its own members at a discount;
• a company that arranges to purchase goods from other companies, so obtaining a discount. It will then pay for these goods on its membersâ€� behalf and the members will then reimburse the company or pay a slightly higher price to the company for the goods.

»Ê¹ÚÌåÓýapp members will normally be required to buy shares in, make a loan to, or pay a levy to the company providing the ‘discount serviceâ€�.

Buying organisations like this fulfil the three basic requirements for treatment as a deemed business body under section 94(2)(a) of the VAT Act (see VBNB60410).

»Ê¹ÚÌåÓýapp company can be regarded as an organisation. »Ê¹ÚÌåÓýapp share, loan, or levy requirement constitutes other consideration. »Ê¹ÚÌåÓýapp advantages gained by the members are the right to obtain goods at a discounted rate.