With held takings

[brummie]

i recently left a golf club where i was the franchaisee and running the catering. In my franchaise agreement it was agreed i would pay 5% on all food takings paid for on a club card(its a private golf club) As the club had been running the catering for the last 8 months and there was no inferstruction in place for me to take the money paid for food it was decided that the members would pay at the bar with either cash or their cards and i would invoice the club using the till read outs as a guide. I left there on monday afternoon after a heated discussion with the general manager over the club actually taking 17.5% out of all my takings claiming it as VAT as they had done prior to me taking over. I am now owed 2 weeks takings and various function money adding upto just under £3000 i was told by the manager on Monday afternoon that this will be paid to me no later than Friday 14th March. I approached the club today and was told that the earliest it will be sorted out will be tommorow resulting in me not being paid untill sometime next week. Both the general manager and the club accountant were not availible for me to talk to face to face today and i was given the update by the managers p.a. As they are my takings and they are being withheld is this any different to me being a employee and them withholding my pay? What should be my next step of action should the club continue to hold my takings and let deadlines they set for payment come and go? Sorry for the length of my post but i am trying to get all the details in

[Boxby]

Golf Clubs! I have known golf clubs and golf club committee since I could walk. They unfortunately seem to be run by a lot of committees who are made up of genuinely good people, who sometimes don't really have a clue as to how to run a business!

I can offer no advice i'm afraid, but I offer you luck in sorting it out. (There is a reason my dad only ever lasted a maximum of 4 years at any particular private club!!)

[Jezclayton]

Since you took over the catering in the form of a franchise agreement, it would normally be your responsibility to register for VAT if appropriate and submit the relevant return to HMRC. The club would therefore have no right to deduct VAT from you.

I suspect things are more complex than you might consider (who paid for the food stocks and was VAT claimed back?) and it might be helpful if you familiarise yourself with VAT regulations. Monday does not seem too long to wait for resolution especially if you only left last Monday.

I know it is hard to take if cash is short, but heated discussions rarely work in your favour. Have you asked politely for an explanation as to why the club feels it is correct to deduct VAT? They may not be sure themsleves and are merely seeking to check before giving the money away. Sounds like someone may have messed up.

Best of luck.

[brummie]

Thnaks for the reply. I brought the stock off them and did not claim VAT plus all stock i have brought since has been paid for by me and again didnt include VAT. I am not to intrested in the VAT part as they have agreed to pay me the VAT on my takings back my main worry is that all the takings from food shouild come to me but the club are reluctant to hand them over this was the case during the time i was there and is now even worse now i have left. I have paid all my suppliers and staff out of my own pocket but am now struggling to pay personal bills due to the fact they havent given me my takings. In the end they are treating me as a employee where i didnt not work for them i am totally seperate to the club its just there poor set up meant that i couldnt have access to my takings. Surely as its my money they should pay up straight away i gave my notice and was prepared to work my notcie period only to be given a letter on friday evening stating they wanted me out by sunday i said i would prefer to work my notice as i have made commintments to my staff and to my suppliers and the members at the club after i confronted the club on monday about the % of my takings being taken by the club and the fact they are also trying to claim that VAT was included in prices quoted for outside functions which i have paper work showing that this is incorrect. The general manager has a reputation as a liar and is called tefal as nothing sticks to him but i have dug my heels in and researched and found out that he is lying and trying to decieve me and take money for various things that are not true. Is it better for me to approach a solicitor now that things are dragging on?

[Peter Bowen]

I think in cases like this it's always best to get professional help. Hand it over to a solicitor and keep your head and your emotions free for making money in whatever else you do.

[HAZEL B]

Clubs like Parliaments are notoriously difficult to deal with because of the "he said, she said, they said" mentality that often prevails. I suggest that instead of going to a solicitor you put together a list of the items you are claiming (with backup copies of relevant info.), take it to the club along with a letter stating what you are owed and why under the agreement you made. Keep the tone very reasonable and business like, avoid accusations. If you don't leave with a cheque, send or pass copies of your letter to as many members as you can (this will make sure they hear your side of the story).

If they still don't settle go straight for county court. In county court both sides represent themselves and solicitor's costs cannot be claimed. The club will not want a judgement and therefore if your claim is resonable they will settle.

Let us know how you get on.

[Jezclayton]

In your last post, you state:

"I brought the stock off them and did not claim VAT plus all stock i have brought since has been paid for by me and again didnt include VAT. I am not to intrested in the VAT part as they have agreed to pay me the VAT on my takings back.."

You imply that VAT has been charged on food sales and therefore one must assume it was also claimed back on purchases. It is also implied that this was effected by the golf club as you do not appear to be registered for VAT, or at least have not stated such. I am confused as to the basis upon which VAT was charged "on your takings" if you are acting as an independant franchise not registered for VAT.

I am not sure how much a solicitor would help as the query seems to be more related to registering and accounting for VAT. You can get the relevant information free of charge off the HMRC website or alternatively seek advice from an accountant.

At this stage I would like to make it clear I am a small business owner and not a lawyer or practising accountant. I have found the cost of utilising solicitors very expensive (£200 per hour in my part of the world) and therefore tend to utilise an internet based debt collection company to issue a Letter before Action (LBA) and then proceedings if required. Try "thomas-higgins.co.uk".

When conducting any business remember to maintain a professional attitude at all times. This can be very difficult, especially when money is tight. I find it helps to think of a company I really admire and then visualise myself as representing that company. Not only does it fill me with confidence that I am backed by a large organisation, but it gives me both added assertiveness and the ability to recognise when I might be wrong.

Best of luck.

[brummie]

I am not VAT registered when a member paid for food at the bar they are give a receipt stating on the bottom that VAT had been paid so a sandwich would cost £2.50 including VAT on my menu and when i took over i kept the same prices but as i am not VAT registered i charged £2.50 and thats all. I had to invoice the club weekly for my takings using a reading off the till that gave a overall view of what had been put through the till e.g beer or food there where 3 colums of fingures the 1st being the totals including VAT the 2nd was the about in VAT and the 3rd was the total with VAT deducted. The club knew i wasnt VAT registered so intructed to only invoice them for the total minus the VAT. I then relised after 5 weeks that in reality i was instead of getting the full £2.50 for a sandwich i was only recieveing £2.50 minus the 17.5% for tax. So basically even though i was charging £2.50 i wasnt getting the full amount. I dont think the club are claiming this back as VAT but in reality they are taking 17.5% for no reason. The general manager is also claiming that when they agreed a price for a function say £10 per head that this included VAT. On the 1st function at the club i was given the incorrect menu which was the clubs fault. I charged the club 80 people at £10 per head and was paid the £800 by the club. The organiser of the function stopped the cheque to the club and has agreed a £200 pound discount with the club because the menu was incorrect. Now the club has claimed that they charge VAT and i owe them £144 from that function but have said they only want the VAT paying back on this function but i have proof that this is incorrect and when i questioned this and backed it up with written proof he backed down straight away and said that they will not be charging me the VAT and will refund me all that had been deducted from my invoices. When i contacted the club yesturday after being told that i would be fully paid up by today they told me they couldnt do anything till today and would contact me today to agree the figure they owe me. I have now heard nothing off the club and will not till monday at the earliest again another deadline the club has set has passed without me recieving any payment? Will going to them do any good as they keep making promises and not keeping them all i am asking is for my money as a independant franchaise all i want is what is mine i have provided the service and now i want them to pay me up so i can walk away from this whole messi think that bcause i have unearthed his lies and deception the general manager is waiting till his back is covered before paying me and i have a feeling he will not offer me the whole amount due to me for some reason which again will be totally untrue

[RedJem]

If the golf club are VAT registered then they will have to account for the VAT on the sales. ie. they will have to hand over the VAT to HMRC. If the sales receipt shows a VAT number then they are likely to be registered. You can check with HMRC.

You should only be getting £2.13 from the sandwich sale. The balance of 37p goes to HMRC via the golf clubs accounts. You should be raising an invoice to the club for the total sales less the VAT.

The £144 quoted for VAT on the function does not look right as it means the function cost £822.85 plus VAT at £144 = £966.85 unless some other factors have been included. If the club organise and run the function then they are correct to charge and account for VAT. Outside catering is a VATable supply at 17.5%. If the function was contracted directly to you then you would not need to charge VAT, if you are not VAT registered.

It seems clear to me that there are misunderstandings on both sides particularly with regard to VAT. You need to understand this before you go any further. I imagine the reason why there are delays in your settlement is because various parties have realised they don't know what are the correct figures to account for and are desperately seeking the accountant or someone for advice before paying you. I suggest you all get together and admit that it needs sorting out with someone who knows what they are doing and then a possibility you might be able to carry on if you haven't burnt your bridges.

[brummie]

Why should i only get £2.13 from the sandwich sale when i charge £2.50? What right do they have to charge VAT on my takings?

[RedJem]

It is not a question of right. It is a question of the relationship between You, the golf club and the customer.

If the sales transaction is between the golf club and the customer, and the GC is VAT registered then the GC has to account for VAT. The GC will only receive 2.13 as they will have to give 37p to HMRC.

If you have agreed with the club that you will receive 2.50 then the club should be selling for 2.94, which means 44p goes to HMRC.

If you have a franchise agreement whereby all food sales are yours entirely, and the club is just acting as agent selling on your behalf then you would get 2.50 and you would have to account for the VAT yourself if VAT registered.

The crux of the problem is on what basis are you all working, who has or hasn't got a VAT liability, how the accounting is being done and whether HMRC have agreed to the set up. Until you sort that out no one will know what the right numbers are. You also need to do the same on outside functions as that could be done on a different set up more favourable to customers ie. cheaper. but again HMRC need to agree.

You need to set aside your feelings about being being ripped off, and don't be so sure that you are, until you know the correct position. If you have all been working on a wrong/unclear set up and VAT is due to HMRC then undoubtly someone will be out of pocket, and it maybe you will all have to agree to share that loss and put it down to experience. This might leave you in the position of still being at the golf club and at least getting money in the long term which must be worth more to you than this short term hiccup.

[brummie]

I have now left the golf club and am still awaiting my takings from the 23/02/07 to the 10/03/08 this also includes payments for various functions. I have a franchise agreement where all sales are entirely mine and they club has agreed to pay me the 17.5% of the takings they have taken as VAT as i am not registered. My arguement at the moment is i am still awaiting my takings from the 23/02/08 and since i have left the club on the agreement i would be paid in full by today and this hasnt happened what should me next line of action be?

[creospace]

Why should i only get £2.13 from the sandwich sale when i charge £2.50? What right do they have to charge VAT on my takings?

If they are vat rated then they have to charge vat by law - that's simple i'm afraid.

[Jezclayton]

If the club told you that you would receive £2.50 for a £2.50 sandwich sale that is what you should get. The fact they have to account for VAT on that sale is their problem.

I think it is time to get tough. Bearing in mind you have already left the golf club, you could perhaps play dirty and suggest to the Club Captain (or whoever the most senior official is) that you are going to ask the VAT office to investigate as you believe there are irregular VAT transactions being filed which have resulted in you being left out of pocket.

Providing your turnover was below the VAT threshold, do be very careful to check this properly, you have nothing whatsoever to lose. The club on the other hand could find itself in deep s**t.

I still suspect someone has made an administrative error and is now desparately trying to get around it. Frankly, that isn't your problem.

You don't have to be threatening about it just let them know that you are very confused and think it would be beneficial if you got the VAT Office (Inland Revenue) to investigate. I suspect that settlement would be forthcoming rapidly.

Best of luck.

[brummie]

If they are vat rated then they have to charge vat by law - that's simple i'm afraid.

Well as i am totally seperate to the club and am providing a service to them and am under the VAT threshold of £60,000 and am not VAT registered i cant see how they can claim VAT on my company takings?

[Boxby]

If they are VAT registered, then they should be paying VAT, but the misunderstanding may be that they would pay VAT on the element that they take only, on their 5% (or what ever the % is because I can't remember!)

Is there actually an accountant at the club, or involved in this discussion or is it the club secretary/committee, as many club secretary's do not the accounting knowledge and may sometimes just totally misinterpret basics such as this.

[brummie]

There is an accountant at the club but the general manager has asked me not to approach him as the manager wants to deal with it himself. I think this down to the fact the manager has stated the accountant has quired a couple of my invoices regarding VAT being included in function prices. As i have got written proof this is not the case i think the accountant hasnt quired any invoices and the general manager has just said this to get some money back on a function where the golf club has agreed to give a discount due to a mistake on their part,if i approched the accountant i think i would find he has no knowledge to these quired invoices and the manager is trying desperatly to cover his tracks

[Boxby]

Ok

I have done lots of accounts and audits, of clubs and associations, and I have to say that there is a higher than normal amount of theft going on in them, and no insult intended, the steward and the secretary are usually high up on the list of potential suspects.

You need to go to the accountant. You are getting nowhere with the general manager. All of this is the accountant's field. Is the accountant an accountant or an "treasurer" (i.e. person appointed treasurer with no partic qualifications/experience)?

[brummie]

he is a seperate from the club he comes in once a week to do the accounts they do also have a treasurer but he is not involved. I think the best course of action is to go to the club on Monday morning and to see what the situation is I will also contact my accountant for advice its just all a pain as i just wanted a clean break i handed my notice in for health reasons and this hold up is not helping with the health issues I really do think there is some sort of deception going on the manager is not liked at all by the members and his nickname is tefal as things dont seem to stick to him when the brown stuff hits the fan nearly every member that knew i was leaving enquired if he was the reason he doesnt work weekends maybe it would be an idea to go to the club and speak to a few of the members but i really dont want to play "dirty" i just want whats mine

[PI Guy]

this may be a misunderstanding but as i am sometimes very cynical, i think you should play dirty and also do some investigating at the weekend.

Someone is on the take IMHO

[Jezclayton]

I think Boxby may have hit the nail on the head.

Maybe it's time for Tefal to become unstuck? The very fact he doesn't want you to talk to the accountant or treasurer probably suggests you should do just that.

Do let us know how you get on - The mystery deepens.

[brummie]

just a update i have recieved payment on monday but my figures and there figures are out by about £600. I have been sent a breakdown showing me how their figure has beeen reached and it states they are still claiming VAT on my takings and also function prices. I have written prove that they do not claim VAT on function prices so what other reason do they have for deducting 17.5%. On the bottom of the letter it states i should only invoice Net prices for functions as i only claimed Net on the day to day takings. But if its £8 a head and i charged £8 a head and the club hasnt charged VAT isnt the whole £8 mine?

[Jezclayton]

Could it be that they forgot to charge the VAT and the papers you have seen reflect the bill without VAT. They have now spotted the error and have adjusted the invoice to reflect VAT within the £8 charged.

There is little point in procrastinating, you need to decide on your plan of action. Either:-

1) Forget about it.
2) Ask the club accountant for an explanation (have you spoken to him yet?) and be prepared to accept his response if reasonable.
3) If unreasonable, present the accountant with the written proof you have that they don't charge VAT on functions and demand that they square up with you. If that doesn't work and you are confident of your proof complain to the Inland Revenue that you believe you are a victim of VAT fraud.

The third option may seem drastic. but you have to decide how far you want to take this and how confident you are of your facts.

Best of luck.

[FPB-advice]

Excellent news you got most of your money :)
In the absence of not belong to any org that could offer specialist advice in respect to the VAT element now unresolved, it may be best if you contact HMRC and speak with them, once you have their 'theoretical viewpoint as you would be anonymous' take the issue up with the accountant, ask if he would like the HMRC to confirm over the phone the correct process.. see how that goes.