We provide printing, framing and dispatch services for Artists.
The Artists uploads thier image to our website, and a Customer will buy a print of the image, which we produce and ship.
We deduct the actual cost of printing (including VAT) and a % commision (again, including VAT) from the total paid by the Customer, and transfer the rest to the Artist.
We are VAT registered. If the Artist is not and we have charged VAT on the total cost, then the Artist will lose out on a significant amount of income.
It looks like we can treat the Artist's profit as a disbursement, as long as we make this clear on our invoices to the Customer, but the regs aren't clear to me.
I'd like to be able to consider the Artist's image as thier IP that we're paying them a fee to use. I think in that case it would be acceptable to treat this as a disbersement.
But if it was considered that we are taking thier Artwork and changing it into something else then perhaps it's not ok to treat this a disbursement.
Does any one have any advice or relevent examples of what is acceptale and what's not?