The surety is required to collect and remit the tax the obligee is required to pay. |
It is a three-party agreement between the principal, the obligee and the surety. |
An agreement between an obligor and an obligee as to what is commercially reasonable shall, subject to paragraph 3, be conclusive. |
Instead, the surety is engaged in making taxable supplies of construction services to the obligee. |
An example would be when a third party gives a bank a promissory note for the payment of the obligor's debt, which the bank, as obligee, accepts. |
However, tax may not actually be collectible if the obligee is, under an Act of Parliament for example, not required to pay tax. |