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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4984
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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Hello, I have a few questions about my accounts. I run

Resolved Question:

Hello,

I have a few questions about my accounts.

I run a small business dealing with online bookings for B&B's, as part of what I do I collect deposits for my clients which I pass on to them.
Do I need to include this money in my annual turnover?

Secondly I also pay various companies invoices on behalf my clients and assimilate them into a monthly bill along with my charges.
Do the companies charges need to be included in my turnover?

Finally one of the companies who's invoice I pay works under the reverse charge VAT system. I'm not VAT registered, but one of my clients is VAT registered. Does anyone need to pay VAT?

I hope that makes sense!
Thanks
Dave
Submitted: 3 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 3 years ago.
Hello and welcome to the site. Thank you for your question.

[q]
I run a small business dealing with online bookings for B&B's, as part of what I do I collect deposits for my clients which I pass on to them.
Do I need to include this money in my annual turnover?

[a]
You are the middle person collecting money on behalf of your clients and passing it to them. It is not your turnover and should not be included in your annual turnover.

[q]
Secondly I also pay various companies invoices on behalf my clients and assimilate them into a monthly bill along with my charges.
Do the companies charges need to be included in my turnover?

[a]
If you are just playing the role of a banker making payments on behalf of your clients, then these charges are not your turnover. You should be maintaining a control account to account for these recharges.

[q]
Finally one of the companies who's invoice I pay works under the reverse charge VAT system. I'm not VAT registered, but one of my clients is VAT registered. Does anyone need to pay VAT?

[a]
If the invoices are addressed to/from the companies who are VAT registered then no one need to pay VAT. More information on this can be found here

http://www.hmrc.gov.uk/manuals/vatpossmanual/vatposs14100.htm

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 3 years ago.

Hi,


Thanks for your reply its very helpful. However I am still a little unsure on the reverse charge VAT bit.


 


The invoices are sent in my companies name for the commission on a hotel booking. As I am not VAT registered I think I am right in thinking I don't have to pay the reverse charge VAT, however as I am effectively a middle man and am effectively passing on the invoice to the Hotel so as they are VAT registered do they need to pay the VAT under the reverse charge rules?


 


Or are we saying I am receiving and paying the invoice and then charging the Hotel the same amount therefore nobody needs to pay the VAT?


 


I'm not 100% sure I am explaining this very well!

Expert:  taxadvisor.uk replied 3 years ago.
David, thank you for your reply.

I am busy with my client and will revert to you this evening.

Thank you for your patience.
Customer: replied 3 years ago.

no problem. Thanks for your help

Expert:  taxadvisor.uk replied 3 years ago.
Thank you for your reply.

I am still with a client and will come back to you later in the evening.

Many thanks
Expert:  taxadvisor.uk replied 3 years ago.

David, thank you for your patience.

The reverse charge applies to services where

- the place of supply is the UK

- the supplier belongs outside the UK

- the customer is a relevant business person - see

http://www.hmrc.gov.uk/manuals/vatpossmanual/VATPOSS01350.htm

- the supply is not exempt

- for supplies not within the general rule, the customer is VAT registered in the UK.

As you are not VAT registered reverse charge on services does not apply to you.

Both the supplier and the customer have to be relevant business person for application of reverse charge

More information on reverse charge can be found under VAT on services received from overseas suppliers here

http://www.hmrc.gov.uk/vat/managing/international/imports/importing.htm

and here

http://www.hmrc.gov.uk/manuals/vatpossmanual/vatposs14300.htm

 

I hope this is helpful.

taxadvisor.uk and other Tax Specialists are ready to help you
Expert:  taxadvisor.uk replied 3 years ago.
I thank you for accepting my answer.

Best wishes.