Agent's commission and VAT

intellectualproperty

Hello,

I'm a writer, and I'm trying to do my own accounts, including VAT.

Can anyone advise on this:

I get a book deal for £175,000.

My agent takes 15% commission (£26,250).
My agent takes VAT on that commission (£5,250).

So far, that's £31,500 gone.

How much VAT do I owe the government? Is it as simple as ignore all the above, and pay 20% VAT on the whole book deal (£35,000)?

Or is it £29,750 (£35,000 minus what my agent charged on their commission, £5,250)?

Any help is much appreciated. And yes, I should get an accountant...

p.s. Assume that I have no other costs, such as claiming back VAT on paper and pencils etc.

Auntie-Dolly

Are you VAT registered?

intellectualproperty

Auntie-Dolly wrote: »

Are you VAT registered?

Yes, I am registered.

chrismac1

The taxable value of your supply is 175,000 and the VAT on this is 35,000. You should get a valid tax invoice from the agent with 5,250 on it, if you don't then don't pay!

Assuming no other transactions in the quarter, that is 29,750 to cough up 37 days after the last date of the VAT quarter. The key thing on big items is to ensure you have a valid VAT invoice with VAT number and amount of VAT clearly shown - because if you get an enquiry, you'll typically be asked to e-mail or post the big items to HMRC and if they all pass muster that's that, you should be safe from their attentions for a few years.

chrismac1

The main pitfall with advance receipts is that the VAT tax point is the earlier of the date of supply and the date of receipt. So if the £175k was received on 31 March and that was your VAT quarter end, it goes on the March return.

Sometimes agents are not great at sorting out their systems and issuing of statements and need a bit of chasing.