Self Employed

Carroll21

Hi,

Not sure if I’m posting in the right area. I’m self employed and have been for a year. 

I manage a business and receive a 20% commission on the sales. 

I have VAT deducted from the total sales before I take my 20% to pay my staff costs and I was just wondering whether this is correct?
I’m not VAT registered and it works out a lot to lose every week with having VAT deducted based on the service I supply. 

Any advice would be great as I’m not entitled to any of the self employed corona support schemes. 

Jeremy535897

The business you do work for will have to hand the VAT over to HMRC (less input tax claimed), so it is logical. What really matters though is what your contract with them states.

TBagpuss

You say you are not VAT registered, but it sounds as though you are managing a different business. Is the business VAT registered?  If so, then it spends logical that the VAT would be deducted first - it's not part of the business's profit, it's just money they are collecting n behalf of the government.

If the business is not VAT registered then that doesn't apply, but the amount you received is in nay event going to be based on what the terms of the agreement between you and the business say. 

JJC1956

The Business is not charging you VAT, you are receiving 20% of Net Sales not Gross sales, makes sense to me.

Pennywise

Carroll21 said:

Hi,

Not sure if I’m posting in the right area. I’m self employed and have been for a year. 

I manage a business and receive a 20% commission on the sales. 

I have VAT deducted from the total sales before I take my 20% to pay my staff costs and I was just wondering whether this is correct?
I’m not VAT registered and it works out a lot to lose every week with having VAT deducted based on the service I supply. 

Any advice would be great as I’m not entitled to any of the self employed corona support schemes. 

It's 20% on the value of services you provide to them, i.e. your turnover/sales.  The fact that some of that money you have to pay out as direct costs to your staff is irrelevant.  VAT charged is on turnover, not profit.

Have you evaluated whether you'd benefit by being VAT registered yourself?