Evening
Thanks in advance for all and any advice.
Q. We have sales distribution agreement in place. As part of the contract the distributor is contracted to make a minimum payment against sales come key date next year. This MG will be reduced by any sales they can conclude between now and the key date.
I have advised them the MG is due plus VAT. They are a UK entity.
They argue it is not due with VAT.
Is there any argument they could have that the payment would for some reason not be Vatable at standard rate?
Thanks again
Related resources
Replies (3)
Please login or register to join the discussion.
I take it that it is common
I take it that it is common ground that VAT is due on actual sales but the difference of opinion relates the VAT status of any further payment to top up the figure to the Minimum Guarantee amount in the event that actual sales fall short of that figure.
It does not seem to me that the top up payments are for a supply of goods or services and therefore VAT would not be due. But I do not claim to be a VAT expert.
Option?
Isn't the MG the price they pay for the (exclusive?) distribution rights, so a taxable supply
Many thanks for your replies folks.
Still unclear on this.....back seeking further claification from our local advisors on this. Interesting.....
Thanks much