[Marie Stein]

Hi Digi

I’m very sorry, have just realised that your query was sitting there waiting for a reply!

Based on the information you have provided, you don’t have to register for VAT in the UK if this is your only activity. This is because the goods never enter the UK and therefore the sales are “outside the scope” of UK VAT.

In principle the EU supplier who sells you the goods should be able to sell them to you without adding VAT because the goods are being shipped directly to the non-EU desination.

However you might want to register for VAT here if you are incurring any VAT bearing costs as you should be able to recover the VAT on those costs in the same way as any other UK business. This is called “voluntary registration”.

Also, it might be a good idea to register anyway in case you have any situations in the future where the goods are delivered to customers in the EU rather than outside the EU. If you aren’t registered for VAT in the UK or the EU country where the goods are delivered, your EU supplier would have to charge VAT which you would not be able to recover. That is a whole separate subject and you can find information on this and other intra-EU trade VAT issues in VAT Notice 725: The Single Market, which is on the HMRC website.

You do need to think carefully about whether or not to register in the UK on a voluntary basis – to begin with it will benefit you as you will be able to recover VAT on most UK costs, but it also means that you have to submit VAT returns and account for VAT on any taxable supplies in the UK.

There is more information on whether or not you need to register for VAT in the HMRC Notice 700/12 “Should I be registered for VAT” here http://tinyurl.com/3a4rak. Sections 1.11 and 2.9 deal with making supplies outside teh UK and voluntary registrations respectively.

I hope this helps a bit even if it’s a bit late, but let me know if you have any further questions on this subject.

Kind regards
Marie

[Marie Stein]

Hi Del

Glad I could help and it makes sense. Regretfully it is all down to the contractual position and I suspect that an awful lot of new bands sign up to such agreements without appreciating that their share of the take is after VAT has been deducted. I hope your guys end up making lots of money in the longer term!

I’m looking forward to the Martinis should we ever meet!

Kind regards
Marie

[Marie Stein]

Hi Del

Well I was having a nice relaxing Sunday afternoon then I read your post. And you’re right, it is a bit of a humdinger!

There are several difficulties with these sort of situations and the main one is that the VAT issues depend on the contractual arrangements between the parties. Whenever I provide formal advice to clients about any type of contractual arrangements, I always have to see the contracts as the VAT liabilities depend on what’s in the contracts. The issues are as much a factor of contract law as well as VAT law. Otherwise I’m really just commenting “blind” based on the very limited information that you’ve been able to provide in your post.

I wouldn’t normally reply to this sort of query on the forums as even a simple explanation of the VAT principles involved takes a long time, but this sort of query does come up from time to time so it’s worth spending a bit of time on it. It’s also an interesting subject (okay, I know I should get out more …)

I must recommend that if you are talking about a situation where there is a lot of money involved or the contracts are complicated or there is any dispute about the terms of the contract, you really should take formal advice from a solicitor and/or a VAT consultant.

First of all, you are, in principle, correct in saying that the VAT liabilities of the services of the service provider and the seller are two separate issues and that each party is responsible for their own VAT issues. However everything comes back to the contractual arrangements and some important VAT principles. There may also be some confusion about the use of the terms “agent” and principal” which are often used to mean different things.

I’ve tried to explain some of these with a simple example below.

VAT Inclusive or not?

Suppose I made a table and took it to a VAT registered retailer who agreed to sell it in his shop. Assume for the purposes of this example that I’m not registered for VAT. I charge him £40 for it and we agree that the retail price will be £100. We agree to split the profit when he sells the table, and I assume that I’ll get £30 once it’s sold.

Unfortunately when I get the cheque, it’s only for £23.48. When I ring him up to ask for the rest of my cash, he says that the profit is calculated after VAT. When he sold the table for £100, he had to charge VAT, which at 15% VAT inclusive is £13.04. So the profit is only £46.96, not £60 and my share is only £23.48, not £30.

I don’t think that’s correct – as I’m not registered for VAT, I shouldn’t have to pay VAT when the table was sold. However when I read the small print on the contract, I find that once the retailer paid me £40 for the table originally, it became his property. This means that when he sold the table, he had to charge VAT and the £100 retail price is VAT inclusive. And the contract also says that the profit is calculated on the basis of the VAT exclusive retail price.

Now I might agree with that interpretation or not, but it is what’s in the contract. The problem is that I didn’t read the contract properly or even understand the contract properly when I signed it. And believe me, I have seen this situation happen time and time again over the years. The simple point is that once I’ve sold the table to the retailer, it becomes his property.

In your case, I suspect that the contract between the service provider and the seller is similar. The band is selling the right to sell their music to the service provider – presumably it’s some sort of distribution agreement or licence – and the service provider charges retail customers for the right to download the music. If I’m correct, then the service provider would be entitled to deduct the VAT on his selling price before calculating how much is paid to the seller, ie the band.

Agent or Principal?

The other angle often causes confusion in the case of artists, be it authors, bands etc, is the use of the terms “agent” and “principal”. It sounds as though you think that the service provider is only acting as an agent for the band – because the service provider gets a “percentage”, it sounds like an agency arrangement rather than a principal to principal arrangement.

Now this is where VAT and contract law becomes very complicated – because even if the contract refers to the service provider as an “agent”, he may still be regarded as a principal for VAT purposes. This means that – like my table – the band sells the music (be it an album, recording of a concert etc) to the service provider. Once the service provider buys the product, the service provider is selling to the customer for the right to upload the music as principal. In the same way as sales of CDs or DVDs are made by the production company and not the artist, the customer is buying the right to the download the music from the production company, not the band.

The VAT law on “agency” transactions is really quite difficult and there is a whole section in the HMRC VAT Notice 700: The VAT Guide about the subject here http://tinyurl.com/d7ml2m. It’s worth spending a few minutes reading this to understand how the VAT rules work with agents – there is a load of caselaw on the subject as well and many very learned VAT experts have come a cropper with VAT agency issues over the years.

The best of way of demonstrating that the service provider is acting as principal is that if there was a problem with the download, the customer would have legal recourse to the service provider, not the band. So the service provider is selling the music, or to be more precise the right to download the music, as principal and is right to charge VAT on the sales. And if the contract is like the one relating to my table, then the service provider will be entitled to deduct the VAT on sales before calculating the bands’ share.

This is just a short summary of what I think are the main issues but I hope it helps you to sort things out properly. I suspect that the band has signed a standard contract with the service provider and you really need to have a proper look at this to make sure that you properly understand the arrangements. You might also want to take legal advice about the contract if you are uncertain about what it means – if you are signing artists who aren’t VAT registered, you might want to try and get a lower percentage for the service provider to try and mitigate the effect of the VAT on the band’s share of the profit.

And as far as the percentage is concerned, as the service provider is VAT registered, it will be liable to VAT. Whether or not the VAT is included in the 15% will of course depend on what it says in the contract!

I assume that the band has already signed up to the service provider and it might be too late to try and change the contract, but if not, you might be able to get a better deal for the band before the deal is signed by changing the way in which the band’s share is calculated.

Let me know how you get on with all of this. If I think of anything else important that might be relevant, I’ll add a further reply here. But for now, I think I need a very strong martini…….!
Marie

[Marie Stein]

Do you know exactly when he de-registered? It’s possible that he de-registered from VAT part way during your building work, therefore he’s charged VAT on the payments up to that point and then stopped charging VAT once he de-registered. He might also just have charged VAT in error after de-registering.

But if he has shown any amount as VAT on any invoices – whether or not he was registered at the time – the VAT belongs to HMRC unless he has charged it in error and correctly refunds it to you with a credit note.

It’s always a bit of a sticky area this one – we’ve all heard the “cash no VAT” line. And I know a lot of people actually ask to pay in cash to avoid paying VAT.

If you’ve paid him in cash while he was registered (or liable to be registered due to undeclared sales), he is still liable to pay VAT to HMRC, even if he didn’t charge it. Also HMRC could prosecute him for fraud or at least charge him significant penalties if he underdeclared his VAT.

I appreciate that you may not want to challenge him directly about this issue, but you could ask him if he’s charged VAT in error as you thought he was de-registering. If this is the case, then he may be willing to refund the VAT that he has charged. If you signed a contract with him for the building work, there may be something in the contract confirming whether or not he is registered for VAT.

If he refuses to refund the VAT or you want to check that he has at least paid the VAT to HMRC, you can report the facts to HMRC who will look into the matter. There is some information here http://www.hmrc.gov.uk/vat/sectors/consumers/basics.htm on the HMRC website page for consumers that you may find helpful.

You’ll also see at the bottom of the consumers’ page a hotline number that you can use to report suspected fraud. You don’t have to give your name or any personal details and I understand that HMRC get a lot of queries about VAT charged by unregistered contractors or for cash payments via the hotline.

Marie

[Marie Stein]

HI AW

The way that VAT works is that, in principle if you are a business and your “taxable” turnover exceeds the registration limit, which is currently £67,000 a year, you have to register for VAT. The limit applies to any 12 month period – so if your turnover in the year to 28 Feb 2009 was say £70,000, you’d have to register for VAT. You also have to register if your turnover will exceed the registration limit in the next 30 days.

Two further points: first, the limit applies to any business carried out by the “person” – so if you are a sole proprietor running an accountancy firm during the day and a pub in the evening, the registration covers income from BOTH activities. Second, you can also register for VAT voluntarily if your turnover is below the registration limit.

Like everything with tax, there are exceptions to the rule and certain businesses are EXEMPT from VAT which means that they don’t register regardless of their turnover. But if you are buying and selling goods, then chances are your supplies are taxable as the majority of goods are “taxable”. I’d have to know what you are selling to confirm that the sales are “taxable”.

The way that VAT works is that if you are registered for VAT, you claim back the VAT on the purchases and expenses (this is called your “input tax”) and charge VAT on your sales (this is called your “output tax”) and you pay the difference to HMRC when you submit your quarterly VAT return. The effect of this is that the amount of VAT that you pay to HMRC is the VAT that you make on your profit.

If you’re not registered for VAT, you can’t claim back teh input tax on your purchases, so you have to factor this into your budgetting as additional cost. But you don’t charge VAT on your sales.

The best way of showing this is to give an example so you can show how the figures work. Let’s think about something with a recommended retail price of say £17.25 – say a tee shirt.

Assume that you are a VAT registered business and you buy the tee shirt for £10 plus VAT of £1.50 and want to make a profit of £5. You’d sell it for £15 plus VAT of £2.25, ie total sales price of £17.25. On your VAT return, you pay the output tax of £2.25 less the input tax of £1.50. So you pay the net amount of 75 pence to HMRC.

Now let’s consider if you are not registered – a lot of small businesses trade below the registration limit – for example, if your sales are £40k or £50k a year. What this means is that you don’t add output tax to your sales, but you can’t claim back input tax on your purchases and expenses. This means that you have to treat the VAT on purchases as part of the purchase price.

This might seem to be a bad thing, but for small businesses it can actually help as you don’t have to add VAT to any profit. And it makes you more competitive if you are selling teh same goods as VAT registered businesses.

For example, in the case of our tee shirt which costs £10 plus VAT of £1.50, the total purchase price for the item is £11.50 as you can’t claim the VAT as input tax. If you still want to make your £5 profit, you sell it for £16.50.

And this is the important bit – because you’re not registered for VAT, you can sell the item for 75 pence less than a VAT registered business and still make the same profit. Alternatively you could sell the item for £17.25, the same as the VAT registered business, but then you would retain the additional 75 pence as additional profit.

So, as you have rightly concluded, to make a profit, you have to take the VAT INCLUSIVE amount of your purchases and add your mark up to that figure.

If you are buying from someone else who is not VAT registered, they shouldn’t charge you VAT in addition to their sales price, but the VAT that they paid on purchasing the goods will be included as part of their purchase price as they can’t claim it back.

I hope this clarifies things for you. VAT is a difficult subject and we can only ever explain the general principles on the forum. If you want more information, you can have a look at our “Beginners’ Guide to VAT” here on the website. Alternatively, a good starting point is the HMRC Notice “Should I be registered for VAT” which is here http://tinyurl.com/3a4rak on the HMRC website.

Marie

[Marie Stein]

Hi pfldisco

A small proportion of VAT repayment claims are chosen at random for more detailed inspection. In some cases it’s the size of the claim (£12k is quite high for a first claim) or it might be that you haven’t started making any sales yet, or that your sales are all zero-rated so that you’ve not paid any output tax on your return. Sometimes it might be something as simple as a posting error on the return so the figures don’t add up properly

Whatever the reason for the query, they are entitled to carry out the review and the best way of avoiding any further delay is to co-operate and supply the information they request.

Chances are that your return was picked out for a very simple reason and perhaps it’s taken a while because the officer who has to authorize the repayment is being a bit over-conscientious in wanting to check every single point. But usually, these things are dealt with quickly as HMRC might end up having to pay you extra money as a repayment supplement (see below for further info on this) if they delay the repayment without reasonable cause.

Obviously I don’t know why they have asked about your funding arrangements. But they are allowed to look into any issues relating to supplies made to (ie your purchases and expenses) and supplies made by (ie your sales) the business. So that could include how you have funded the purchases. It doesn’t seem to be an unreasonable request – for example if you had a loan from a family member or the bank, just tell them the facts and if possible, show them some documentary evidence, eg correspondence with the bank.

However, the rules aren’t all in their favour. They are normally required to make repayments within 30 days of receiving the return or pay a supplement of the greater of £50 or 5% of the amount claimed. However, the 30 days doesn’t include the time it takes them to carry out “reasonable enquiries” which typically would include carrying out an inspection or requesting further information. So until their “reasonable enquiries” are completed, the 30 day clock is put on hold.

This subject is explained in further detail in the VAT Notice “Treatment of VAT Repayment Returns and VAT Repayment Supplement” which is here http://tinyurl.com/delgf4 on the HMRC website. It’s a short notice and should take about 10 minutes to read through.

It sounds as though they are simply following normal procedure for verifying the claim and their queries are “reasonable” in the circumstances.

I don’t know all of the facts of your case but the best way of speeding things up is to give them the information they have requested. And at the same time, explain how important it is that you get the repayment quickly or the business may fold. The officer may simply not realize how urgently you need the repayment, so make the point that you’ve responded to all of their queries and that you expect the repayment to be made without any further delay.

I would suggest speaking to the officer first by phone if possible and then writing so that there is a proper record of your concerns on file. Hopefully this will speed things up.

If they still won’t authorize the payment, they should give you a reason in writing and if you disagree with their reasons, there is an appeals process which is explained in the Notice. But I hope that things don’t get that far and you get your repayment soon.

And yes, even if you haven’t received the first returns’ repayment by then, make sure that your next return is submitted on time so taht they don’t have any other reasons to delay the initial claim.

Marie

[Marie Stein]

Hi Phil

What a minefield you have got yourself into! This is one of those areas of VAT that is very complex and there is quite a lot of caselaw about the subject, so the VAT Notice only really covers the main issues. Hopefully my comment will help you find the right answer.

There is some additional guidance on the HMRC website about the VAT liability of financial services here http://www.hmrc.gov.uk/manuals/vatfinmanual/VATFIN7200.htm, which gives more detailed guidance than you will find in teh notice. I’d suggest that you have a look at this as it sets out HMRC view on whether someone is acting as an intermediary.

The guidance includes a flowchart to be read in conjunction with the notes but the very first point on the flowchart asks “Is the business/person bringing together someone seeking a financial service with someone providing a financial service?”. If the answer is no, then the flowchart states that the business is not acting as an intermediary. Therefore if a supplier has been working as a subcontractor for the M & A advisor this would prevent their services from being regarded as those of an intermediary and their services should be taxable.

However the position is not black and white as the guidance also explains that it is not always necessary for a business/person to contract with either party to the transaction for their services to be exempt. You mention that you have been involved in the negotiating process so this may enable your services to qualify as “intermediary” services even though you are subcontracted to the main M & A supplier.

I hope this helps you to confirm the position and if you decide that the liability is correctly standard rated, you can refer the M & A advisor to the guidance to verify the point.

Marie

[Marie Stein]

Hi Ballgazer

Intercompany recharges are a bit of a minefield really, they can cover a whole host of issues so I’ve tried to explain some of the basic principles.

First of all, I assume that the companies are not in a UK VAT group registration and that the Dubai company is not registered for VAT in the UK or any other EC country. I also assume that the recharge is for the provision of the car alone and that it does not form any part of an overall supply of services from the UK company to the Dubai company, eg consultancy services. If it does, that is an whole other subject!

There is not much guidance on the VAT treatment of intercompany charges simply because the term can cover a whole range of supplies. You have to analyze the nature of the actual services provided in return for the charge before you can establish the correct VAT liability. And of course it becomes even more confusing when you are dealing with cross-border charges as these involve the “Place of Supply” rules which are explained in detail in VAT Notice 741.

There is a short notice 700/34 on the HMRC website (type VAT Notice 700/34 Staff into the search box and go down the list to the heading “Staff” and click on this to open the notice, then see paras 3.4 – 3.8) which deals with charges made for supplies of staff and this provides a little guidance on charges made for services of directors, which you may find useful. However you have to treat this notice with caution as much of it deals with supplies of staff and a particular concession known as the “Staff Hire Concession” which was withdrawn on 1 April this year. The notice is being updated to reflect this change, but as far as I am aware the guidance given about services of directors has not changed.

However, I think that your query is actually more straightforward as you seem to be talking solely about the recharge for the use of the car in the UK. In this case you probably do need to charge UK on the recharge to the Dubai company, because the provision of the car falls into the “Use and Enjoyment” rules, ie because the car is used in the UK, then the supply is always liable to UK VAT regardless of where the recipient belongs. See VAT Notice 741, section 14.4 – 14.5 which explain this in further detail. Obviously I don’t know the full circumstances of the use of the car, but have a look at this section and hopefully it will enable you to reach the correct conclusion.

If VAT is chargeable, it may be possible for the Dubai company to make a claim for the UK VAT charged by applying for a “Thirteenth Directive Claim” which allows non-EC business to claim certain VAT costs incurred in EC countries. You can find information about this in VAT Notice “Refunds of VAT in the EC for EC and Non-EC Businesses”. It is relatively easy to make these claims but they can be more trouble than they are worth if teh amount of VAT involved is relatively small.

I hope this helps you to find the answer.

Marie

[Marie Stein]

Hi Funkymonkess

It might be possible to zero-rate the sale but it depends on a number of factors, so I’d need more information to give you an answer.

You mentioned that the goods are sold to a non-EC company and delivered to a cruise ship. I assume that the company owns the cruise ship, is this correct?

What sort of goods are you talking about? The reason that I ask is that there is relief from VAT if certain goods are delivered to cruise ships.

There is information about this topic on the HMRC website http://www.hmrc.gov.uk. Type “VAT Notice 703” in the search box at the top of the homepage. Notice 703 deals with export VAT issues and have a look at section 10 of the Notice which contains information about sales of goods to ships.

Have a look at the notice and if you still need some help, let me know.

Marie

[Marie Stein]

Unfortunately there is no simple yes or no answer to your question about your company’s VAT bill and in fact I think that it is a matter of commercial law rather than VAT law.

So I would advise that you refer this matter to the company’s solicitor to get proper advice about the legal position.

But this is how I think it works:

First of all, I assume that the company has been registered for VAT since 01/08/2007 and this is why it has to pay VAT on income from that date.

There are a number of points that you need to consider.

What does the contract say?

I assume that the clients signed contracts or agreements or agreed to certain terms and conditions for the work/goods that were supplied. So to begin with, you should check what is said in these or any other documentation about VAT.

Treating the amounts as VAT inclusive

I understand that the normal position is that if the original documentation didn’t mention VAT, then the amount that is charged is treated as VAT inclusive.

This means that if the VAT rate is 17.5% then the VAT is calculated at 7/47 of the amount charged. If the VAT rate was 15%, for supplies on or after 1 December 2008, the VAT amount is calculated at 3/23 of the amount charged.

When you can add VAT to the amount originally charged

If the documentation says that the charges are VAT exclusive and VAT would be charged, then you should be able to add the VAT on top of the amounts charged.

As you know, you might find that the clients who are registered for VAT are willing to accept an additional charge for VAT on top of the amounts originally billed.

But do talk to the company’s solicitor – there may be other legal aspects to consider.

Other issues

A couple of final VAT points.

First, you are probably aware that the company is required to issue proper VAT invoices to VAT registered clients regardless of whether or not the VAT is included in the original amount or is added on top. This is so that the clients can claim the VAT on their VAT returns.

Finally the company may also be required to make a voluntary disclosure of the £20k as it exceeds the limit of £2,000 which can be included on VAT returns – see HMRC VAT Notice 700/45: How to correct errors and make adjustments or claims for information on this subject.

[Marie Stein]

Yes AS, you are correct, you apply the “VAT fraction” to the VAT inclusive amount owed. So if someone has paid you £400 of a VAT inclusive bill of £900, you would calculate the VAT amount as 3/23 of the outstanding £500. If the debt relates to a supply at 17.5% VAT, the VAT is calculated at 7/47 of the VAT inclusive amount owing.

I’m sure you are aware of course that Bad Debt Relief can’t be claimed until at least 6 months after the date of the supply and only when the supplier has satified the other conditions set out in HMRC’s VAT Leaflet 700/18: Relief from VAT on Bad Debts.

Hope this clarifies the point
Marie

[Marie Stein]

Hi Steve, yes I think the site you’re after is this one http://europa.eu.int/comm/taxation_customs/vies/en/vieshome.htm, the VIES site, but unfortunately it doesn’t seem to be working at the moment. (Found it in para 4.9, VAT Notice 725: The Single Market). It is a while since I used it so I don’t know whether it is permanently down or just temporarily off line. I’ve had a look at the HMRC manual and they are still showing this as the link for verifying numbers.

Is the number a UK number? If so it should be possible to verify it using the old 987654321 method which I understand it still the way in which the numbers are put together. Alternatively VAT Notice 725 does contain the format of each countries’ numbers at section 16.17 so at least you can verify that it is in the correct format.

And as you know, you can always ask the HMRC helpline to check a number.

Sorry I can’t help more. I wonder if the VIES site is being updated for the introduction of the new ESLs for services next year and that may be why it is out of service.

Marie

[Marie Stein]

Hi Dean

I assume you mean VAT on the van purchase? VAT isn’t charged on loan interest.

As far as the van is concerned, you can only claim the VAT back if you’ve got a proper VAT invoice from the supplier which will show the VAT amount on it. If you’ve bought the van from someone who isn’t registered for VAT, they won’t have charged you VAT on it. So have a look for the invoice and that should show you the VAT amount.

Hope that helps. God luck with the rest of your first return!

Marie

[Marie Stein]

Hello DubaiSteve, isn’t that the name of a gin based cocktail???

I’m not sure that I can give you a detailed reply to your question as I am not an expert on GST and can only comment on what I understand to be the main differences. Also we have to be a bit careful about terminology. We use VAT to refer to our EC system, but some countries call similar systems GST. For the purposes of this reply, “VAT” refers to our EC system or similar systems in non-EC countries, while GST is a sales tax levied only at the final point of sale.

The VAT system that we have in the UK is the EC VAT system. The principle behind the system is that final consumers (ie private individuals or businesses which cannot recover VAT) have to pay VAT on the full value of the taxable goods and services that we buy. So it sounds like a sales tax.

However, it works on the basis that each supplier charges VAT on his sales, but can offset against that “sales” VAT (or “output tax”) the VAT that he has paid on his purchases and expenses (or “input tax”). So each supplier only pays the difference between his output tax and input tax to the tax authority in his country.

This means that each business in the “chain of supplies” pays only a proportion of the VAT on the final selling price which is borne by us as final consumers.

The system is efficient because it is easy for the tax authorities to collect and administer as the businesses do most of the work. It is also less susceptible to fraud or loss as each business accounts for a proportion of the VAT on the final selling price.

The benefit of the sytem is that if one of the suppliers in the chain underdeclares his liability or is unable to pay, only that proportion of the VAT on the final selling price is at risk, rather than the whole amount.

Many non-EC countries have a VAT system which is similar to the EC system, based on collecting tax along the chain of supply. For example I understand that Canada, New Zealand, Australia operate a very similar system. Just to confuse the issue, I think that in at least one of those countries calls the system GST, but it is a VAT system.

GST is also used to refer to a simpler sales tax system. This is different to VAT as it is only collected by retailers selling to final consumers.

The best examples I can think of are the state and local taxes levied by retailers in the US. If you buy something from a retailer in the US, you normally find that state, federal or local (eg county level) taxes are added onto the sales price at the point of sale. So you might buy something with a sales price of $100 but have to pay an additional 8% state tax and 2.4% of local tax in addition. The retailer has to pay the full amount of these taxes to the appropriate tax authorities, at state, federal or local level.

Clearly GST is a simpler system to the EC VAT system in that generally only the final retailer who has to collect the tax and submit returns and payments to the tax authorities. In the days before VAT, the UK had a tax called “purchase tax” which was levied and collected along the same lines. But VAT systems are being introduced in many countries because the tax authorities recognise the benefits of using the sytem.

I appreciate this is a very simple answer to a very broad query but I hope it helps a bit. If you need more detailed information about GST or VAT systems in non-EC countries, you might try looking on the websites of the international accountany firms.

Kind regards
Marie

[Marie Stein]

Hi Danby23

I’m assuming that the company is registered for VAT and that the event is a taxable event. There are some exemptions for certain charitable, sporting or publicly funded events and there is information on the HMRC website about this if you think it might apply.

But assuming it’s a normal commercial operation and doesn’t qualify for exemption, you calculate the VAT on the ticket sales by multiplying £15,000 by 3/23, which comes to £1,956.52.

If the company isn’t yet registered and this is it’s only income, you wouldn’t have to register for VAT as the turnover is under the registration limit which is currently £67k. However it might be worth registering on a voluntary basis if the company will be incurring VAT on costs (input tax) that it wants to recover.

If you need more information on VAT registration, have a look at VAT leaflet 701/1 “Should I be registered for VAT” which is on the HMRC website.

Hope this helps
Kind regards
Marie

[Author]

Posts