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What constitutes Turnover for VAT purposes

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Client has set up a " Management Company" to provide services ( laundry/ repairs/ admin etc ) to a site of holiday lodges. It's turnover will clearly be identified by the value of those services.

They are considering asking the park's customers to pay for the cost of their stay direct into a "Holding A/C " in the Company's name. Once these funds have cleared , they will without any deductions be forwarded to the lodge owners.

I need to be sure that these latter transactions do not constitute Turnover for VAT purposes - General Enqiries of no use whatsoever as usual. I do not consider they do but do not want any nasty surprises down the line.

 

 

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RLI
By lionofludesch
22nd Jan 2019 15:20

Depends on the contract but, prima facie, this seems to be money that they're collecting for someone else.

Who does the ultimate customer think he's dealing with ?

That could be the key to your problem.

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By WhichTyler
22nd Jan 2019 15:31
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RLI
By lionofludesch
22nd Jan 2019 15:46

A good lawyer will draft you a contract to get you what you want.

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By andy.partridge
22nd Jan 2019 16:12

Confused.

Is the park and the management company the 'same people'? If not, why would the park's customers be paying them and not the park, and why would they forward the funds on to the lodge owners 'without deductions'.

At the very least I expected you to say they would deduct their charges for providing their services.

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Replying to andy.partridge:
RLI
By lionofludesch
22nd Jan 2019 16:22

I inferred that they were separately invoiced.

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By andy.partridge
22nd Jan 2019 17:34

I might be inclined to arrange things differently if I'm in charge of providing admin services.

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chips_at_mattersey
By Les Howard
22nd Jan 2019 16:36

Are you trying to exclude some turnover from VAT?
If so, then there looks like artificiality in what you describe.

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By the_drookit_dug
22nd Jan 2019 16:53

So the management company is acting as an agent? You'll need to establish whether they're a disclosed or undisclosed agent in order to establish where the liability to register/account for VAT lies. As suggested previously, check the contract.

You may also want to check https://www.gov.uk/guidance/vat-guide-notice-700

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