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Post Info TOPIC: VAT on introducer's fees
HendyPhilhendy


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VAT on introducer's fees
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I have a client who is VAT registered. He has recently agreed to act as introducer for someone in the same industry but that does a slightly different element of the work (It is not IFA, insurance or Estate agents!).

The person he is introducing to is not vat registered.

The arrangement is that my client will get 2% of the end sale. They don't have to do any work, other than introduce.

My question is should my client extract VAT on the commission he has received. He will not be raising a VAT invoice.

This one has got me little bit stumped as I can't seem to get a clear answer! HMRC site is, as is often the case, not helpful.

If anyone can help or link me to the appropriate sections on HMRC site it would be appreciated.


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Wella


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Hi Phil

I would say that an introducer would be the same as an agent, efectively earning a commission.

This is an extract from VAT700, para 22.3

22.3 How are agents involved with VAT?

As an agent, you will usually be involved in at least two separate supplies at any one time:

  • the supplies made between your principal and the third party; and
  • the supply of your own services to your principal, for which you will charge a fee or commission. The normal VAT rules apply to your services as an agent.

It is important to distinguish between these separate supplies.


Although this isn't exactly the same, the fee payable is by any other name commission, I would have thought. I would also guess that he would be obliged to raise a VAT invoice, as he is supplying a service.

Bill

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