Revenue Share/Commissions

mike1983

Hi everybody,


Been pulling my hair out with this today...Can't find anything on HMRC website :thumbdown:.

I have a VAT registered client who sell leads to banks, lenders etc. They only get paid for each successful lead.

It's a bit like commssion but the client calls it a revenue share.

As this sector is financial services and is exempt from VAT at the buyer's end (banks, lenders), my client receives his 'revenue share' without VAT...

My question is, does my client need to declare VAT on this share when he receives it or is it exempt???

Any advice would be greatly appreciated.

Thanks in advance

Monsoon

If you're being paid a commission/ finder's fee/ introduction fee for services in the financial sector, it's VAT exempt.

mike1983

Thanks Monsoon,

That's what we were hoping for, but we have found that you need to be acting as an intermediary to be exempt.

HMRC define an intermediary as:


9.1 What is an exempt supply of intermediary services?

A supplier of an exempt intermediary service is a person who:
■ brings together a person seeking a financial service with a person who provides a financial service
■ stands between the parties to a contract and acts in an intermediary capacity, and
■ undertakes work preparatory to the completion of a contract for the provision of financial services, whether or not it is completed.

We are now unsure as to whether they meet the third part as they have no involvement in prepartory work, but they only receive their fee on successful leads so do they??????

Chapter 9 in this link explains further:

http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageLibrary_ShowContent&id=HMCE_CL_000111&propertyType=document#P21_2015

deanshepherd

No preparatory work = no exemption.

Selling leads would not be exempt if that is the full extent of their involvement.

mike1983

Thanks

Thanks Dean,

This forum is fantastic. Lost count of the amount of help and confidence its given me ever since I started out on my own. Half of the time I don't need to post my query as it has usually been asked and dealt with earlier :laugh:

Massive thanks to all!!!