I have a client who has opened an art gallery, he is selling artists work and retaining a commission after forwarding the artist their share. Is his turnover the entire sale price of the item or just the percentage he keeps? He currently is not VAT registered, though this may change soon.
So long as the art is held on a sale or return basis then only the commision would be recognised through the accounts.
HTH,
Shaun.
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Shaun
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Your client can use a margin scheme to account for VAT.
So to answer your question, for VAT purposes the commission he retains is a basis for calculation of VAT.
Let me give you an example:
Let's say his commission is £2400 for a VAT period.
The VAT is £2,400 x 1/6 = £400
If the seller does not own the work of art when it is being sold, then presumably the seller acts as an agent on behalf of the owner.
If this is the case then we need to know whether he is a disclosed or undisclosed agent and depending
on that the VAT treatment of the sale will be different.
