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Book keeping for revenue held by a third party

We sell tickets for events and get payouts regularly

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I think I know how to treat this but would appreciate confirmation or correction:

We are an events company. We sell tickets through third party sites (and have different arrangements with each of them) but our main seller retains 20% of sales to cover refunds, and releases 80% of sales on a weekly basis. The remainder is released after the event.

I'm just trying to work out the right postings.
I need to account for VAT on all ticket sales when the sale takes place, so I could create a sales invoice transaction, post the 20% to a retention account and the remainder to a deferred income account.
Should I set up a 'bank account' or maybe just a balance sheet account in my ledger to show the balance held with the third party?

[I am holding the costs for each event on the bal sheet and will expense both revenue and expenses once event has taken place.]

Thank you in advance for your time :)

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By paul.benny
27th May 2020 08:39

I'm more or less with you on your approach.

I would call amounts due from ticket sellers a receivable rather than 'bank'. Depending on volumes, I'd probably use separate receivable accounts for each seller to make reconciliation easier, and possibly something similar by event on the deferred income side.

You need to ensure that (a) you're not deferring income from events that have taken place and (b) the sellers do actually pay you the 20%. I might also want to monitor refund volumes. It strikes me as unusual that buyers can receive refunds. It would be so easy for a seller to inflate refunds for their own benefit

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Replying to paul.benny:
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By thejho
27th May 2020 09:09

Thank you.
OK yes I think a receivables for each seller is the best way.

I'll need a process for expensing costs/revenue after the event but that shouldn't be a problem.
We have total transparency over ticket sales and retentions as we can see each customer order so I am happy with that.

Thanks for your time.

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Replying to paul.benny:
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By thejho
27th May 2020 09:10

Duplicate

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Replying to paul.benny:
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By thejho
27th May 2020 09:10

duplicate

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Hallerud at Easter
By DJKL
27th May 2020 09:40

Interesting question regarding what is the vat tax point for these sales, especially if main seller is deemed your agent, if that is the case (and I am no great shakes at the nuances of vat) is the tax point for vat possibly not when they receive the money irrespective of when they remit it to you?

https://www.gov.uk/hmrc-internal-manuals/vat-time-of-supply/vattos8300

edit-see,

"Payments received by a principal via an agent
An agent is the alter ego of the principal. This means that a payment received by an agent on behalf of the principal, is also received simultaneously by the principal. This has implications for time of supply purposes, in situations in which the payment creates a tax point for the principal. It is the time the payment is received by the agent that creates the tax point for the principal, rather than the time it is received from the agent."

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Replying to DJKL:
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By thejho
27th May 2020 09:55

Thanks for this point.
I am planning to set it up so we account for VAT at the time of the ticket sale. Unfortunately this isn't the way it is currently done so I'm just trying to get things right going forward, but also need to do some catch up postings.

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