I have a client who is a beauty therapist trainer. As part of the business she rents out part of her salon to self-employed therapists and receives commission on any -treatments that they do. (The self-employed therapist take money from the clients directly and they then pay commission to my client). My question is, should she be invoicing the self-employed therapist for this commission and should she be charging VAT ? At the moment it is being paid directly into the bank account.
If your client is VAT registered then she must account for VAT on any other income that she receives. That includes commission or recipricated services (barter). I would advise her to invoice per VAT quarter based on the amount banked (VAT inclusive = 1/6th VAT). In future, if prctical she could invoice plus VAT. I have recently published a book called "Draw A Line Under Your VAT Problems" which you can download for free. I also have a "ask Ann" portal.
Many thanks Ann. I had found a thread on Accounting Web that had answered my question. If the underlying service is exempt from VAT (not sure if it is, will have to check) would she still charge VAT herself?
