Another VAT question...

[ANDREW88]

With apologies for my lack of experience in this sector. However, please could someone advise on the below scenario and requirements for VAT purposes:

• Our business 'A' is VAT-registered.
• For one evening, we have agreed to team up with another business 'B' (also VAT-registered) to sell tickets to an event that business 'B' is hosting.
• The understanding is that any tickets that business 'A' sells will be charged at £4.00 per ticket, with £1.50 of that cost being retained as direct income to our business 'A' and the other £2.50 being given to business 'B'. Business 'B' will also sell other tickets as it normally would.
• Business 'A' would pay VAT on the £1.50 income from each ticket it sells.
• Business 'B' will do the same and pay VAT on the £2.50 income from each ticket that business 'A' sells, as well as pay VAT on all of business 'B's own ticket sales.
• There are obviously running costs involved in the event. Business 'B' has agreed to cover all of these.
• After these running costs have been accounted for, business 'B' has agreed to give to our business 'A' 30% of all profits from the event after VAT has been paid by business 'B' on the total income that they receive for the night.
• Since business 'A' will be receiving this 30% of the profits after VAT has already been paid by business 'B', does our business 'A' have to also pay VAT on this income that we get a result? Or do we leave the payment of VAT entirely to business 'B'?
• If we do have to pay VAT on the 30% of profits that we receive, then essentially VAT will have ended up being paid twice to HMRC?
• (Note that I fully understand we must pay VAT on the £1.50 that we get as direct income from the ticket sales.)

I may have got myself very confused with this scenario, but would appreciate some clarification from someone with a little more experience! Many thanks in advance.

 

[StevensOnln1]

You would need to issue a VAT invoice to Business B with VAT charged on top of your 30% of the profits. Business B will reclaim this VAT as normal.

e.g. If profits are £100 you would receive £30 + VAT of £6 from business B, who would reclaim the £6 VAT paid to you.

 

[ANDREW88]

You would need to issue a VAT invoice to Business B with VAT charged on top of your 30% of the profits. Business B will reclaim this VAT as normal.

e.g. If profits are £100 you would receive £30 + VAT of £6 from business B, who would reclaim the £6 VAT paid to you.

Many thanks and apologies for delay in responding.