Living Social charging VAT twice?

~Jem~

I really don't know where to post this, so sorry if it's in the wrong place.

BAsically last year I had a small beauty room and did a deal through Living Social. A few weeks later I closed the business and therefore contacted Living Social to refund the remaining customers.

Here comes the ridiculous bit. To cut a long story short, rather than ask for the money like a normal company, they pass this straight onto a debt collection agency. I have been sent an invoice and the amount they are asking for back is more than I got in the first place.

They take 50% of the revenue plus 20% VAT. But then because they have raised an invoice for the money I owe them there is another 20% VAT on that too. Is this correct?

The whole thing seems like a ridiculous way of doing business, especially the fact that this went straight to a debt collector, who in turn didn't even write or call me, but sent an email, and not even to the email address that I had used for correspondence with LS, but the business email address that I was about to shut down!

They haven't even got the correct dates or even my correct address on the invoice.

Is there anyone out there who can tell me where I stand on this? I know I have to pay back what I got in the first place, but to pay VAT on it again just seems wrong? Paying an extra 20% because they raised an invoice rather than just asking for the money back??!

Thanks in advance

John_Pierpoint

I think you need to explain more about the contract you have with "Living Social".
LS appears to be an organisation that sells packaged services for a 50% commission.
I am not clear how LS and you were charging. LS asked for a "deposit" of 50% and then you charged the other 50% after supplying the service?
Presumably the customers of LS have to be fully compensated or perhaps have to be bought the equivalent service elsewhere ?
If LS has to sell the customer 100% of the service in their name then they would have to charge 20% VAT on the lot.

~Jem~

John_Pierpoint wrote: »

I think you need to explain more about the contract you have with "Living Social".
LS appears to be an organisation that sells packaged services for a 50% commission.
I am not clear how LS and you were charging. LS asked for a "deposit" of 50% and then you charged the other 50% after supplying the service?
Presumably the customers of LS have to be fully compensated or perhaps have to be bought the equivalent service elsewhere ?
If LS has to sell the customer 100% of the service in their name then they would have to charge 20% VAT on the lot.

They already charged VAT once, they took 50% of the money fore the deals sold PLUS 20% VAT. When the refunds happen, they rufund their bit, I refund my bit, but rather than them just saying 'oh you owe xx' ie what I originally got from the whole deal, they raised an invoice for it and are charging VAT on the invoice. So they took for VAT when they took their comission and there trying to take for VAT for this refund.