'Revenue' Question - Please Help

[JamesBlack70]

Any advice is greatly appreicated.

We have a business that helps people/businesses claim back tax such as VAT.

We charge a 20% commission from the amount that we secure for the client.

Therefore our fee for a £1000 VAT refund would be £200.

We receive the refund on the clients behalf, deduct our fee and give them the remainder.

I just wanted to confirm what our revenue figure should be. £200 or £1000

Is the £1000 a transfer payment?

 

[musicbusiness]

Your revenue would be £1000 as this is the amount you recieve as the VAT refund. You would then pass £200 on as an expense account or similar.

If you put your revenue as £200, when it came to reconsiling your bank/books, nothing would make sense.

Plus, I have a feeling, it may even be fraud because you are claiming to have recieved less revenue than you actually did... ... and you would be making a HUGE loss on the P&L! Since you'd be paying out £800 for every £200 you got in!

 

[JamesBlack70]

But we are receiving that £1000 on the clients behalf, and then taking our fee of £200 which is surely the revenue?

Isn't it like a solisitor receiving the proceeds of the sale of a house?

That's not his revenue, he is just holding that money for his client, and will then say take a fee of 2%, and this would be his revenue?

 

[musicbusiness]

Might have to speak to accountant, but it might be a case of:

REVENUE: £1000
COST OF SALES: £800
GROSS SALES PROFIT: £200

 

[David Griffiths]

Your revenue is the £200 commission. You are simply receiving the tax refund as agent for the customer and there is no question of that being treated as your revenue.

It would be good practice (and an absolute requirement for most professionals) to receive the repayments into a designated client account. Transfer the net amount on to the client and transfer your fees to your office account.

 

[Jaykay]

Your revenue is £200 - the balance is not yours.

Cheers.

 

[Zeno]

I am sorry but you claim to be running a business where you "help businesses claim tax back" on a commision basis but don't know enough about accounting principles to even know what your own turnover is?

How on earth can you be qualified to offer tax advice?