I've got a query about ticket sales - we act as agents for a number of companies and sell tickets on their behalf. We charge the exact same amount as we purchase them for, plus add a 10% comission. The customer is aware of this and knows that they are getting tickets from our supplier.
As such are we allowed to class the actual tickets as a disbursement so we dont pay tax on it (and cant claim tax on it)
for example (normal way without disbursement)
Tickets Net: £85.10
We pay: £100
Charge to customer
Tickets + 10% Service Charge (inc vat):
They pay: £110
We can claim back £14.90 input tax but pay £16.90 (so we 'lose' £2 per transaction on a £10 comission- not ideal!)
However if we could treat the ticket as a disbursement, then we would claim no input vat back but pay:
£1.75 (vat on £10)
A lot of our suppliers are also not vat registered, so this way would be preferential (otherwise we would pay £16.90 on a £10 comission!!!)
I'm afraid the key to this is the fact that you 'sell tickets'.
As such the supply you make is for the sale of the ticket and hence the whole lot will be chargeable to VAT.
If this is the case then how can any agency like us make a profit when vat registered? I know for a fact that ticketmaster, etc all charge a 10% booking fee (inc vat) - so if my sums are correct, they will make a loss!
we sell ticket for £110
say the supplier to us is not vat registered
We pay £15.71 vat out of that - ouch, a £5.71 loss!
However we are in the same boat as every other ticket agency who also deal with non-vat reg clients! There must be a loophole here somewhere, I'm sure its something to do with 'disclosed agents' but the wording is unclear. Another email to the vat office by the looks of it!
Not sure about your sums but I make it that for each ticket sale there is £8.52 profit per ticket post VAT
£110 in, minus £16.38 VAT payable, minus £100 originally paid for the ticket plus the £14.90 of recoverable VAT = £8.52
I would also imagine that most booking agents dont pay the face value of the ticket anyway - I know in one of my student jobs in an indep CD store we used to buy our tickets in often at between 50-75% of their face value and then sell them at face value plus the 10% handling charge.
yes I agree there - the big difference is whether our third party (the principle, the guy with the event) is vat registered.
I know for a fact that ticket agencies will arrange sales of tickets for £100 + 10%, even if the person they are selling on behalf of is not vat registered.
they dont invoice them for £85.10 they invoice them for £100 (full face value) - ive sold tickets with them before when i was not vat registered. so they must have a way of 'ignoring' that £100. And from what I can see on the vat site you are allowed to do this, because:
You acted for the customer when paying the third party:
the customer actually received and used the goods or services provided by the third
the customer was directly responsible for paying the third party;
you were authorised to make the payment on your customer behalf;
the customer understood that the goods or services were provided by a third party;
the amounts disbursed must be separately itemised when invoicing the client;
only the exact amount disbursed is recovered from the customer; and,
the goods or services must be clearly additional to your supplies to the customer (booking fees)