thezebra
17th March 2008, 16:05
I am in the initial stages of starting a home tuition business. We would arrange for tutors to teach students (GCSE, A-level and adult) various subjects from maths to history at their home. A lot of companies in the sector act as an agent and the tutor makes the principal supply of tuition. The usual format is for the student to pay the tutor at the end of the lesson and then the tutor forwards commission to the company.
Rather than go down that route I want to collect the money centrally so students buy blocks of lessons. We can then remit funds to the tutor less our commission. I still want the tutor to be making the supply and so don't have to charge students vat on the tuition.
If our contract with the tutor and terms and conditions state exactly what we do then my question is how will HMRC look at this? I'll be banking, for example, £100 from a student and later paying £70 to tutor on completion of the tuition. I guess we would invoice the tutor for our commission + any VAT due.
Am I right in thinking our revenue for tax purposes is just our commission?
If we need to invoice a student can we invoice in our name or do we need to effectively invoice on behalf of the tutor somehow? And then what happens if a tutor only completes half the tuition and we allocate another! Or if the student finishes tuition but didn't use their lessons leaving money left which is not refunded. Is this the tutor's money or does the agency have a claim to it?
I can only find one company that seems to follow a format much like the above which is Fleet Tutors, although I'm not wholly sure how they deal with finances. Other companies like the AA driving school seem to work a similar model I think and collect monies on behalf of instructors.
Any pointers would be much appreciated.
Lionel
Rather than go down that route I want to collect the money centrally so students buy blocks of lessons. We can then remit funds to the tutor less our commission. I still want the tutor to be making the supply and so don't have to charge students vat on the tuition.
If our contract with the tutor and terms and conditions state exactly what we do then my question is how will HMRC look at this? I'll be banking, for example, £100 from a student and later paying £70 to tutor on completion of the tuition. I guess we would invoice the tutor for our commission + any VAT due.
Am I right in thinking our revenue for tax purposes is just our commission?
If we need to invoice a student can we invoice in our name or do we need to effectively invoice on behalf of the tutor somehow? And then what happens if a tutor only completes half the tuition and we allocate another! Or if the student finishes tuition but didn't use their lessons leaving money left which is not refunded. Is this the tutor's money or does the agency have a claim to it?
I can only find one company that seems to follow a format much like the above which is Fleet Tutors, although I'm not wholly sure how they deal with finances. Other companies like the AA driving school seem to work a similar model I think and collect monies on behalf of instructors.
Any pointers would be much appreciated.
Lionel