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Travel Agents Commission

Travel Agents Commission

Hopefully I've posted this in the correct place now.

I have been approached by an LLP who operate as travel consultants. The two partners were previously employed by The Original Travel Co Ltd and still operate from the same premises. The equipment still belongs to the Ltd Co and the LLP are simply allowed to use it. A 25% commission is paid to the LLP by the Ltd Co on the sales it generates which covers rent, rates, heat and light. They are also recharged for advertising, telephone and stationery expenses and this is deducted from their commission.

All monies from clients are paid direct to the Ltd Co and the commission is paid to the LLP once a month. The LLP incur a small amount of other expenditure ie postage, advertising display etc and these are the only monetary transactions going through the company as the Ltd Co pay the tour operators.

I am trying to establish whether the  commission is taxable as they may well reach the threshold for VAT registration. The LLP think the commission is not taxable and that they do not need to register. One of the partners was previously in partnership with her husband selling financial services and advice where a lot of their turnover was commission. Their turnover was well over the registration threshold and they were not VAT registered and they are presuming that all commission received works the same way.

I have searched through HMRCs vat guidance and cannot find what I am looking for. Does anyone have a similar client or know whether they should be VAT registered if they reach the threshold? Any advice would be gratefully received.


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06th Dec 2012 20:21


Financial Services and Insurance = Exempt

Travel (Tour) operators = Standard


Thanks (1)
By jilbo
07th Dec 2012 11:53

Thank you for the links. I had read the travel operators link and was still not 100% sure, especially when it came the informing the LLP.

I've now got a copy of the agreement between the Ltd Co and the LLP and the 2 partners are referred to as Homeworkers. They have a licence to occupy the Ltd Co's premises and use the fixtures and fittings and equipment as licencees stating that they are not tenants. The Homeworkers are covered under the Ltd Co's public liability and PII insurance and share the commission.



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