VAT reclaiming on a event tickets ?? 23 June 2022 at 1:03PM edited 23 June 2022 at 1:09PM in Small biz MoneySaving 6 replies 133 views

Poshsalt

Hi,

I'm going to do an event and this time the venue and I are doing a 75/25 split.

On there end its 25% + 20 VAT then I get my cut (55%).

They will be selling the tickets and they are vat registered.

If Im VAT registered can I reclaim that 20% back?

Regards

Grumpy_chap

I am not sure how you have worked out the 55% cut to you if the split is 75/25.

Who is actually invoicing the customers?  It looks like that is the other party.  So, they sell a ticket for £100.  That is £100 including VAT, or £83.33+VAT.  That is the income to the other party.

The other party does not keep 25%.  In order to get paid, you need to invoice the other party for your services associated with the ticket.  Your part is 75% of the £83.33, so you invoice £62.50 + VAT £12.50 = £75.  You pass on the £12.50 to HMRC through your quarterly VAT return.

The other party will show in their accounts:
Expense = £62.50 + input VAT £12.50 = £75 total
Income = £83.33 + output VAT £16.66 = £100 total
The other party will pass on the difference between input VAT and output VAT to the HMRC via their VAT-return, £16.66 - £12.50 = £4.16.  The other party retains the £83.33 - £62.50 = £20.83 to cover their expenses, overhead, profits.

The total split of the £100 looks like this:
VAT paid to HMRC by other party = £4.16
Income to other party = £20.83
VAT paid to HMRC by OP = £12.50
Income to OP = £62.50

All either company is doing on the VAT is collecting it on behalf of HMRC.

Poshsalt

Thanks for your help, I've reread the contract and it says I get the 75/25 after VAT, so would that be the same as what you have put above?

Grumpy_chap

Are you VAT registered?

If you are not VAT registered, then you would not be able to invoice your amount + VAT but the VAT-payable on the ticket price would be the same.  So, it would work like this:

Other party sells the ticket for £100 including VAT
Other party receives the income £83.33 + £16.66
Other party pays £16.66 to the HMRC via VAT-return
Other party now has a balance of £83.33, of which they are keeping 25% = £20.83
OP invoices the other party for 75% of £83.33 (no VAT as OP not VAT=registered) = £62.50

Overall result is OP receives £62.50
Other party receives £20.83
HMRC receives £16.66
No change overall.

That still does not tie up with your comment about 55%.

Poshsalt

Hi,

I was going to get VAT registered for this event as in future I thought I'd have to reclaim the VAT from all future event and this would get me my 20% back.

I asked the event how I would be billed for VAT they said

"We will arrange a self-billing settlement, which will pay over to you - All ticket sales plus VAT Less our income share and associated costs."

So what your saying is even if I get registed or not, all the outcomes is from a £100 ticket I get £62.50?

Grumpy_chap

It sounds as though the agent is assuming that you are VAT-registered.
I also understand that you cannot enter into a VAT-self-billing agreement unless you are VAT-registered.
It may be worth asking on the Cutting Tax board as someone there will be able to confirm for sure - provide a link to this thread for context.

It is also unclear from what the agent has said exactly how much they propose to pass on. 
"Less our income share and associated costs".  The incomes share is the 25% you referenced.  What are the associated costs they also propose to deduct?  Should those associated costs be covered by the income share?  
That may be clunky phraseology by whoever wrote that, but you need to understand.

Poshsalt

thanks for your help