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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4996
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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I have recently started to help a friend/client who collects

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I have recently started to help a friend/client who collects furniture, art and antiques. She gives me a list of things she is looking for and I source them from auctions, charity shops, galleries and dealers. The basis of our working relationship is that she pays the agreed price to the merchant and simply pays me a commission on the retail price as a finder's fee. Sometimes, because she is away or because an auction will not accept payment from a third party I pay from my own account and she then reimburses me. Please can you explain if the payments I make on her behalf would be considered as turnover even though I am not buying the goods and selling on at a profit, I am simply making a payment for her which she then pays back. I don't make much in the way of commission and if the payments I make are held to my account then I will make nothing if I become liable for VAT. Please could you advise.
Submitted: 1 year ago.
Category: Tax
Expert:  taxadvisor.uk replied 1 year ago.
Thank you for your question[Q]Please can you explain if the payments I make on her behalf would be considered as turnover even though I am not buying the goods and selling on at a profit, I am simply making a payment for her which she then pays back.[A]Payments you make on her behalf are not for your purchases and therefore not part of your turnover for accounting purposes. You make a payment and the buyer reimburses you for them in full. You should allocate these payments into a separate control account within the balance sheet so that you would know at any time what has been paid and not reimbursed to you. 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 1 year ago.
Many thanks for your answer. If those repayment sums are to be put into a separate control account does it matter if I invoice those repayments on the same invoice as my commission or is that ok as long as they are itemised and detailed correctly?
Expert:  taxadvisor.uk replied 1 year ago.
Thank you for your reply.My recommendation will be to use your invoices for charging commission only and not mix reimbursements with them..Keep it simple and this saves taxman asking unwelcoming questions.I hope this is helpful and answers your question.
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Customer: replied 1 year ago.
That makes everything very clear. Thank you.
Expert:  taxadvisor.uk replied 1 year ago.
I thank you for accepting my answer. Best wishes