VAT when sharing revenue - The Book-keepers Forum (UK)

castaad · Newbie

VAT when sharing revenue

RobH · Expert

If you are charging a commission/collecting fee for debt collection you would charge your client vat on the commission. I am assuming your client has issued an invoice to their customer, lets say for £1000 and you are chasing the payment for which you charge a percentage, eg 5%. You will raise an invoice for £50 plus vat to your client. Or have I got hold of the wrong end of the stick?

Rob

castaad · Newbie

Sorry, I didn't include much detail in my original post.

We would be providing a web service where suppliers can sell their services through our website. Customers will pay us, the supplier will then be able to claim their earnings from us (less say 10% - our fee). The supplier might, or might not be VAT registered, but we are.

So; if a service is sold at £100 and the supplier is not VAT registered, would we charge VAT on £100 or just the £10 coming to us (the other £90 going to the supplier who is not vat registered)?

I hope that makes more sense?

Thanks in Advance.

RobH · Expert

There was a similar post about this a while back but nothing was totally conclusive but we thought it should be ok to charge vat on just the commission part...I'll try and find the post link.

Rob

RobH · Expert

Here's the link...unfortunately the original poster didn't come back with an answer.

http://www.book-keepers.org.uk/forum.spark?aBID=106474&p=3&topicID=35405333

castaad · Newbie

Thanks Rob,

Sorry for the duplicate post - I didn't come across this original thread.

It would be interesting to know what happened in the end, it seems it's a common problem. I'll let you know if I manage to find a definitive answer.

Thanks for your help!

ADAS · Guru

Can I ask who is invoicing the "end" customer for the service?

If it's the company advertising with you, then I'd suggest there's two distinct contracts.

1. A contract between the supplier and the "end" customer for whatever service they're offering. This may or may not be vatable and I don't think it's something you need to account for because your business isn't providing the service directly.

2. A contract between the supplier and your business. In return for customer introduction / advertising they pay you 10% + vat.

However if it's your company invoicing the end customer and then the supplier invoices you for "their share", then I can see an argument for you having to charge vat on the total supply.