sel employed VAT on commission

[emma tate]

self employed VAT commission

Thank you all for your comments and advice. It has been fantastically helpful and I really appreciate the time that evrybody has taken.
Cheers.

Emma

[Old Greg]

Emma

Are you an union member? If so, they may be able to help you.

[zathras]

If you are a teacher unless you are doing home work to private individuals why not just become vat registered and then pass on the cost.

Schools are vat registered.

This VAT issue stinks and sounds as dodgy as a 9 bob note!

If they (the agency) are now liable for VAT then the either should have been collecting it from their client, or they have been collecting it and not paying to HMRC.

If the former then it is their problem. They need to get the money off their client, not the worker. If the latter then tough! they had a hand in the cookie jar and got caught.

The charging commission also seems dodgy but the OP has not given enough information. Do they work via a Limited Company, what exactly are the services provided. Classroom teaching, at their house one-to-one?

[Sockpuppet]

If you are a teacher unless you are doing home work to private individuals why not just become vat registered and then pass on the cost.

Schools are vat registered.

[zathras]

I am a self employed teacher and I am not VAT registered. One of the agencies that provides jobs for me wants now to charge VAT on the commission I pay them because they have become liable for VAT I can't pass this charge on to my clients. Can they do this because it means that I get 17.5% less on my fee?
Any ideas?

This sounds illegal to me.

Now it depends on how you supply services to the agency via a limited company or not.

It is illegal to charge a worker a fee for finding a job. The exceptions to this are the Entertainment trades (actress, actor etc), there may be others but I do not think teaching is one of then, and if you supply via a limited company and only if you have opted out of the regulations. There is no opt out of the regulations if you do not use an intermediary.

If you wanted to complain you will need to speak to the DTI or whatever it is called. They would also give you the most accurate information, me not being a lawyer and all that.

Now the VAT issue. Provision of staff does not attract VAT. Only the agency services do. Also it costs them zilch, nadda, nothing. If they collect VAT from their client, then that is passed on to HMRC. As far as I can tell your services are not even VATable. Again speak to HMRC, they will give you the rules, but from here this does not sound correct.

[Old Greg]

Emma the agency are breaking the law. THIS is the DTI guidance page - the very first paragraph states



They can be "struck off" from acting as an agency if the break this rule, and not allowed to trade. I suggest you speak to someone senior there straight away and ask them to refund every penny of "comission" they have charged you in the time you have worked for them.

Make sure you've got your details right. Are they charging you commission, or do they take a % off the end-client and now they are looking to increase that % because of VAT?

[Bigbird]

Emma the agency are breaking the law. THIS is the DTI guidance page - the very first paragraph states

Can an agency charge me for finding me work or for registering with them?
A fundamental principle of the Employment Agencies Act is that workers cannot be charged for work finding services. The exceptions to this are the entertainment and modelling sectors. Please telephone the enquiry line on 0845 955 5105 if you have a query relating to this area.

They can be "struck off" from acting as an agency if the break this rule, and not allowed to trade. I suggest you speak to someone senior there straight away and ask them to refund every penny of "comission" they have charged you in the time you have worked for them.

[Old Greg]

Re being charged charged VAT on commission - thanks for the replies. Just one more thing - isn't there always? - My contract makes no mention of VAT on the commission I pay to the agency on the full fee I receive from the client. I have actually paid VAT on the last few commissions in good faith and because I didn't know any better - does this constitute an agreement that I am liable for the VAT? Can I reclaim what I've already paid?

This is odd - maybe your agency works differently from mine.

I don't pay 'commission on the fee' from my agency.

I sell my services to the agency and they sell it onto the end-client. The agency takes a percentage from what they receive from the end client.

The agency charge VAT to the client and presumably pays it onto HMRC. The end client pays the VAT but claims it back from VAT. I don't see why this VAT should ever be paid by you.

Have I got the wrong end of the stick? Can anyone else advise?

[emma tate]

self employed VAT commission

Re being charged charged VAT on commission - thanks for the replies. Just one more thing - isn't there always? - My contract makes no mention of VAT on the commission I pay to the agency on the full fee I receive from the client. I have actually paid VAT on the last few commissions in good faith and because I didn't know any better - does this constitute an agreement that I am liable for the VAT? Can I reclaim what I've already paid?

[Old Greg]

I am a self employed teacher and I am not VAT registered. One of the agencies that provides jobs for me wants now to charge VAT on the commission I pay them because they have become liable for VAT I can't pass this charge on to my clients. Can they do this because it means that I get 17.5% less on my fee?
Any ideas?

Why are you paying them commission? Aren't they charging the client instead?

[Ruprect]

who's elaine ?

elainec100 - the poster I quoted. Is this a trick question?

[Bluebird]

Unless it expilicitly states "including VAT" then I think that what elaine has said is b*11ocks I'm afraid.

who's elaine ?

[Ruprect]

Because they are making a taxable supply that they will have to charge vat on.

However what did you original contract with them say – if it was a fee at x% then that’s what you should pay and they will have to ‘absorb’ the vat.

Unless it expilicitly states "including VAT" then I think that what elaine has said is b*11ocks I'm afraid.

[elainec100]

Because they are making a taxable supply that they will have to charge vat on.

However what did you original contract with them say – if it was a fee at x% then that’s what you should pay and they will have to ‘absorb’ the vat.

[emma tate]

I am a self employed teacher and I am not VAT registered. One of the agencies that provides jobs for me wants now to charge VAT on the commission I pay them because they have become liable for VAT I can't pass this charge on to my clients. Can they do this because it means that I get 17.5% less on my fee?
Any ideas?