Hi
New client who is a sole trader on flat rate vat scheme so I understand that other income will be included in the turnover for vat.
He is an publisher and an actor. He receives residual fees approx. £50 every year.
Am I correct in thinking the residual fees are not the same thing as royalties (and so private income which does not have to be included in turnover) and needs to be included in the turnover for flat rate scheme.
If yes, is the correct treatment,
a) Consider the acting residual fees as received net of vat
b) and so grossing them up at the rate of 20%
c) then deducting the flat rate vat from the gross figure.
Also, would you show the publishing fee and acting fees together on one profit and loss account as acting fees are so small or on separate P&L? Historically previous accountant has shown them together in income and expenditure account as opposed to p&l
Thanks
Replies (3)
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I have a very similar client
She has notified all her fees/royalties payers of her VAT-registered status - and the payers add VAT. The fees/royalties are then just part of her turnover, processed through FRS along with the rest.
Residual fees
These are fees recieved from repeats so are income arising from acting and should be included in turnover. There is no reason why these should not be grossed up by the payer under the same self billing arrangements as royalties. These aren't 'private income' whatever thatn means.