Rent a chair and vat? Help please

Thompson24

Can any one help

I have started a job renting a chair on a commision basis, I 50% of my takings as I use all there products and light heating etc etc. which I'm happy with

For example last week I took £500 in takings so I thought I would get £250 however the salon owner said she needs to take off vat first before working out my commison. I'm confused is she doing this right or should the 50% come off the total amout as I'm not vat registered but she as a salon is?

kingfisherblue

What does it say in your contract - I assume that you do have a written contract that you have read and signed?

Thompson24

We sat and did the contract yesterday and we just put in the percentages. I presumed the figure would be the whole amount and the salon owner presumed the figure was ex vat as they are vat registered. So we abit lost.

Derwent

Official HMRC guidelines here, See 6.3 for vat....

http://www.hmrc.gov.uk/manuals/vtaxpermanual/VTAXPER69100.htm

JasonLVC

The salon owner will charge you a "rent" for using their salon/facilities. This charge/rent is VATable where the salon owner is VAT registered.

(The scheme used to work better before a clampdown, the rent was exempt (no VAT) and so was more tax efficient).

Salon owner should raise an invoice to you showing their charge (50% cut) plus the VAT. If they are not issuing invoices to you - as you are an independent contractor remember , then it allows HMRC to attack the chair rent scheme. As the link from the other poster states, you have to be able to set your own times, days, rates, etc.

The salon owner can collect your takings from the customer but they belong to you and so they cannot net off their fees against your takings, they have to invoice you for it and you pay them separate, else it would appear the takings belong to the salon owner and not you, HMRC will attack it again.