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Post Info TOPIC: VAT on Commission on Suppliers Invoice


Newbie

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Posts: 2
Date:
VAT on Commission on Suppliers Invoice


We are a Plumbing and Heating business. Letting agents send us their work and take a 10% commission on our invoice amount. 

Let's use a simple example.... Our invoice: £100 net + £20 vat = £120 gross

Should they:

a) calculate the amount owed to them on the gross invoice amount, then add vat on top of their commission invoice.

Agents commission invoice: £12 (10% of gross) + £2.40 (vat  on their invoice) = £14.40 total billed back to us.  Total percentage = 12%

or

b) calculate 10% at each stage?

Agents commission invoice: £10 (10% of net) + £2 (vat) = £12 total billed back to us.  Total percentage = 10%

 

In example A it seems that we end up paying VAT twice on this invoice. 

Thanks in advance for help clarifying this.



__________________
Jo


Master Book-keeper

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Posts: 8593
Date:

Hi Jo
This is a forum for professional bookkeepers and accountants, not for businesses Im afraid, so we cannot help you.

I would suggest that you have a word with your Accountant, ensuring that you provide that Accountant with a copy fo the contract between yourselves and the letting agents.

__________________

 Joanne  

Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.

You should check out answers with reference to the legal position (and by that I dont mean with HMRC)



Newbie

Status: Offline
Posts: 2
Date:

Ok thank you, I'm asking on behalf of my bookkeeper as they were unsure of the answer either.

All the best.



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Jo
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