We are a team of students wanting to set up a tutoring agency to gain visibility and develop marketing tools. We would like to act as an agent, allowing self-employed tutors to meet parents, and take a commission on each lesson. We are thinking about setting up a limited company.
As we are assessing the possible returns of such a project, and we are now facing two questions:
- What would be our turnover as an agency? Will it be the value of each lesson multiplied by the number of lessons, or the value of the commission multiplied by the number of lessons? Depending on that, will the VAT threshold rely on the total amount of commissions or on the total amount of monies paid by parents ?
- Depending on the first question, how can we make sure that HMRC will identify us as an agent and not a company in terms of invoicing. Can we describe the tutors as suppliers that charge a fee to our company, and invoice the parents on behalf of our tutors ?
I hope that you can help us have a clearer idea about these problems and thank you for your time
As Joanne says, this is a complex one.
Education is sometimes exempt, sometimes taxable at 20%.
It depends on a number of factors, including the status of the provider.
So, engage a specialist VAT person, to explore the options.
Thank you very much for your reply, following your advice we'll try to get advice from a professional. We just wanted to avoid spending too much to setup the project as our budget is limited, sorry for breaking the rules of this forum!
We just wanted to avoid spending too much to setup the project as our budget is limited
But always spending money in the right places will reap its rewards. Although people forget that employing the services of specialists in the first instance can save them money in the long run (even if its to say, your idea will not work!)
Les is the type of expert you want to get on board
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
