Can anyone help with a VAT question on Theatre tickets

Can anyone help with a VAT question on Theatre...

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I have a client with a small theatre production company who rents a room from a venue and put on their own productions, taking all the financial risk.  They use the venue's third party box office to sell tickets.

Lets say ticket price is £20

Box office keeps the booking fee (say £1 plus any VAT) and passes the £20 ticket price to the venue.  Venue is treating this as vatable revenue and is accounting for the £20 as gross, deducting VAT and passing the net on to my client who is not VAT registered.

So client is significantly down on the deal and it may make the production unviable.

I have suggested they contract directly with the ticket agency but for whatever reason they say that's not possible.

My argument with the venue (I think!) is that this is not a "supply" by the venue, they aren't supplying anything to anyone, their "supply" is the rent of the room.  This is also the reason (I guess) why the box office is passing on 100% of the ticket price.

Do you think this "supply" argument holds water or should I try a different tack?

Replies (8)

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Quack
By Constantly Confused
07th May 2013 15:47

Invoices

Hi

Is your client VAT registered? 

Does your client issue any sort of invoice to the venue?

 

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By WhichTyler
07th May 2013 15:53

ROAR

or Right Of Admission Reserved.

If the venue decides who comes in (and they usually do), then they are supplying the end customer, so making a vatable supply. What does the contract between the theatre co and the venue say about ticket income? It looks like the income belongs to the venue, who then deduct VAT and a fixed amount (for hire) then pay the theatre co the rest for putting on the show. So the theatre co supply the venue, who supply the customer  

 

It might be worth contacting a theatre body (such as the ITC) to see if there is a standard procedure or contract that could be used to resolve this without the venue being at risk of a challenge from HMRC

 

 

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By kewcumber
07th May 2013 16:58

Thanks

No client definitely doesn't issue invoices to venue, and client is not VAT registered.

 

I hope to get to see the contract later this week - I'll look at the terms see if that can shed any light on the matter.

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By GW
07th May 2013 17:02

The venue may be correct

See here for details:

 

http://www.hmrc.gov.uk/manuals/vtaxpermanual/VTAXPER78000.htm

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Replying to I'msorryIhaven'taclue:
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By WhichTyler
07th May 2013 17:23

Thanks GW

Good find, and it does seem to put this beyond much doubt

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By WhichTyler
07th May 2013 17:05

Self billing

Usually the venue will issue a 'self billing' invoice to the theatre company.

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By kewcumber
07th May 2013 19:25

Brilliant

That's a brilliant link. You wouldn't believe how much I googled and failed to find that! I think it will come down to precise wording of the contract with the venue.

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By kewcumber
17th May 2013 13:07

Thanks

Just wanted to say thank you for the replies.  I checked the clients contract and it is very clearly vatable according to the link GW provided.

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