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Sam, Accountant
Category: Tax
Satisfied Customers: 7541
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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We have a website and sell our own furniture and other peoples

Customer Question

We have a website and sell our own furniture and other people's furniture online. Our business is called Free Range Designs.

Free Range Designs is VAT registered, but none of our partners whose furniture we also sell are VAT registered.

At the moment, all sales are viewed as FRD sales and all incur VAT. We would like to set up the website so that only the products that we make ourselves include VAT, and those that are made by non-VAT registered partners do not have to include VAT. We would charge a commission fee for each sale made and pay VAT on that commission, but not on the whole sale price.

We understand that this is possible, as long as we make it very clear on the website who the makers are for each product and whether the price includes a VAT element or not.

My query relates to the receiving of payments. If a customer buys a product directly on line, using paypal or moneybookers, for a product that is made by a colleague, that money first comes into the Free Range Designs paypal account, before being transferred to the colleague. How do we need to set up our books so that we are not liable to pay VAT on that income? It feels like we need a 'holding account', from which only our products are registered as FRD income, and sales of colleagues' products are registered as their income.

Can you advise?
Submitted: 4 years ago.
Category: Tax
Expert: replied 4 years ago.

Hello and welcome to the site. Thank you for your question.

Please clarify for me

Do you raise sales invoice for each sale whether sold by FRD direct or on behalf of your partners?

Would you raise a separate invoice for each transaction where the product is not from same supplier and there is more than one item on a single order?


A facility to show prices inclusive of VAT and state on your website the fact prices include VAT where applicable would be helpful. Linking product to different tradng partners would also help

Many thanks