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Vat

GeorgeGeorge Feels At HomeRegistered Posts: 43
A prospective new client is running a music agency with a partner, whereby they are engaged to provide music tuition, concerts and events. They pay the musicians on a self employed basis and retain a percentage for the agency service. The agency is fast approaching the Vat Registration threshold on gross fees received. They have previously been advised that they only need to apply for Vat Registration on their retained fees only. That doesn't seem right to me.

Am I right in believing that they should apply for Vat registration on their gross turnover? And, if so, are their payments to their self employed musicians subject to Vat?

Thank you.:001_smile:

Comments

  • readerreader Experienced Mentor MAAT, AAT Licensed Accountant Posts: 1,042
    George wrote: »
    A prospective new client is running a music agency with a partner, whereby they are engaged to provide music tuition, concerts and events. They pay the musicians on a self employed basis and retain a percentage for the agency service. The agency is fast approaching the Vat Registration threshold on gross fees received. They have previously been advised that they only need to apply for Vat Registration on their retained fees only. That doesn't seem right to me.

    Am I right in believing that they should apply for Vat registration on their gross turnover? And, if so, are their payments to their self employed musicians subject to Vat?

    Thank you.:001_smile:

    Re: turnover- I believe registration should be based on gross turnover.

    Re: payments to their self-employed musicians- if their self-employed musicians are VAT registered/providing VAT invoices then input VAT can be recovered.
  • JodieRJodieR Experienced Mentor Registered Posts: 1,002
    There are special rules regarding VAT on agency transactions. I can't remember the rules off the top of my head so I don't know if they'll apply in your case, but I do have a client who arranges therapy sessions and he only has to account for VAT on his cut of the sale, not on the amount he passes to the therapist. It was a few years ago that he registered for VAT so I can't remember the ins & outs of it, but worth looking into if you've not done so already.
  • deanshepherddeanshepherd Font Of All Knowledge Registered Posts: 1,809
    I agree with JodieR.

    I think you need to establish whether they really are acting as 'agent' or just using freelancers to fulfill their own contract.
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