as mentioned in my previous message if the act is registered for VAT then they would be paid their fee plus VAT so £14 (being 80% of the VAT exclusive sum) + £2.80 VAT so £16.80. (just do the maths £21 vat inclusive = £17.50. 80% * £17.50 is £14).
If they are not registered for VAT then they will be passed £14 and all VAT is sorted out by your client.
Just go through the chain
First, the act is not VAT registered.
Door fee £17.50 plus VAT (£21) VAT goes to HMRC (£3.50) 20% of fee to your client (£3.50) 80% of fee to the act (£14)
Now lets do that again as the act is VAT registered
The act is responsible for their own VAT and the documentation passed to the band accompanying payment must reflect that in the same way as though the act had billed your client for x amount plus VAT (bit of a reverse invoice which needs to have the acts VAT number on it to be retained by your client).
Everyone, HMRC, Client and Act all come out of the arrangement with the same money except HMRC get it from two sources (act and client) rather than one (client only).
It does sound a little as though the promoter is attempting a smoke and mirrors to try and convince you that its the VAT inclusive sum that they get 80% of but thats wrong. Its actually 80% of the VAT exclusive sum plus VAT where applicable.
I don't have any of these sort of clients but to me it sounds as though the money needs to be calculated and then the promoter needs to invoice your client showing the agreed 80% of the VAT exclusive sum plus VAT which you client then pays and all paperwork matches up and the VAT chain is robust and most importantly HMRC's happy and nobody loses out.
There is mention in your message about international acts.
If such is the case then such is beyond my area of knowledge and you need to pull in a VAT professional who specialises in such matters as there will be other complications.
kind regards,
Shaun.
p.s. 80% mentioned for illustration purposes only as that was the amount (worst case scenario) picked from the first message and I've stuck with it even though the second message shows 30% cut so I sould have been using 70% as a basis in the examples.
-- Edited by Shamus on Thursday 26th of September 2013 02:29:42 PM
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
I have a client that has Bands etc on a regular basis, the bands usually get paid 70-80% of the money taken at the door, my Client has a lot smaller percentage, is the vat counted on clients share or on the whole amount? They also have sound engineers etc to be taken of the door sales, again can this be taken into account before or after the consideration for Vat.
Reading your short explanation it seems apparent that your client sells the ticket rather than working on any form of commission basis.
VAT is payable on the whole amount of the ticket.
Lets say that the client sells tickets at £21 (just conicidence that I've picked a nice easy figure, honest, lol).
Vat on £21 would be £3.50 meaning that the actual procedes for your client are £17.50.
Now, if they paid the acts 80% of ticket price thats £16 so your client is only making £1.50 per ticket.
If however they pay the acts 80% of post VAT amount (so pass only £14 to the act) they are making £3.50 per ticket.
Similarly, if the acts are themselves VAT registered then passing on £16.80 inclusive of VAT would mean a VAT inclusive profit of £4.20 which equates to £3.50 plus VAT.
The key though is that the clients VAT liability is calculated on the whole ticket price.
kind regards,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Thank you Shamus, that is what we had thought but the agents for the artistes are saying:
"It's my understanding from working in venues for 10+ years and advancing
>shows in the UK and internationally for major acts that venues deduct VAT
>from their side of split but promoter receives their side of split before
>VAT. The promoter is then responsible for deducting VAT if eligible
>(otherwise promoter is paying VAT twice).
>
>
>I just want to make sure we're understanding each other on where VAT is
>coming off. Can you do me an example transaction please? At moment I'm
>unsure if you're proposing VAT on all ticket income and then split, or
>just your 30%+Vat on that only deducted from total."
Obviously this is a new venture for my clients and we want to start on the right foot.
