Im book-keeper for 3 restaurants - 2 are VAT registered, the other is not yet (new and not reached threshold!)
They have all run a scheme via Living Social whereby they sell vouchers (for a short period) for a meal for 2 at £24 or for 4 people at £47 (discounted from the usual price of eg £50/100).This includes one drink.
Some customers bring paper vouchers in and some just bring their mobile devices (from which they can redeem vouchers). There is no value on the actual bits of paper - just a barcode, so its up to the waiters to redeem online.
Living Social provide no invoices but a report via their website of total voucher redeemed and therefore the overall income due, less their fees (plus an elemnet for VAT)and then how much they pay across to the client. The only thing is that the report changes the minute anyone redeems a voucher so the only thing reliable is the money paid over.
I currently split all customer spend between food and beverage nominal codes based on totals from Z listings from an EPOS system. Ive been told that the vouchers used are not run through the Z totals but as vouchers are redeemed the Total are shown on a spreadsheet that the staff use daily and will be sent to me so I am now just wondering the best way to key the entries for the living Social side of it?
For the VAT registered companies - Do I have to pay VAT on the face value of the voucher or on the £24 / £47 value? Would I just key the voucher sale to food sales (as I do not know the split) or is it better to operate through a different nominal code? How would I account for the money coming back in from Living Social - would this just be reversed from the sales nominal code and how would I treat their fees and the VAT on their fees when its a 'moveable' amount? The amount their send through is already net of fees., but I cannot see it on their system to know how much they have taken for what/what the VAT split is. Ive been all around their website and cannot see any other reports - or am I missing something?
Hope someone can help (an idiots guide please as I seem to be having a brain meltdown on this one and its probably really simple!!)
Thanks in advance
Replies (7)
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More needed
How does Living Social account for VAT on the meal value? Either LS or the restaurant must account for the output tax.
What I would do
Do you know how many meals each payment received is for? If so you can calculate the gross and determine the VAT inclusive deduction for VAT.
I would use a separate nominal for the discount meals so that you can show the effect that the discount is having on the GP%. I might even gross up the meal values and show the discount as a overhead with a view of seeing the full GP%
I'm not sure how LS get away with not issuing a VAT invoice for their fees. There aren't many traders that get this dispensation from HMRC. You need some evidence that you have properly incurred the VAT on the fees to be able to reclaim it. This is normally a VAT invoice but in certain circumstances HMRC will accept other evidence.
OK, but...
I'm struggling to understand a trading relationship where the recipient doesn't know what they are being paid for.