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When sales income is not actually income.

How do u acct for sums of money paid by a customer to a middle-man who forwards receipt to supplier

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I have a client who, for some reason, is in the middle of supplying goods to USA on behalf of another business. The customer pays my client for the goods which he then forwards, in full, to the supplier. My client earns commission for doing this, but as yet I've not seen any in their accounts. As these 'sales' are of high value it would trigger becoming VAT registered in the near future. As my client doesn't actually sell the goods in question, what is the best way to account for them so as not to trigger VAT registration?  Many thanks.

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By mrme89
19th Apr 2017 14:43

The devil is in the detail. You need to look at the contracts between the parties.

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By JRVA
19th Apr 2017 15:49

I have no contracts nor supporting paperwork - client is a law unto themselves! I only have bank statements to work from and am asking constantly for paperwork. Took this client on to help an old family friend who could no longer cope with the accounts for this person - I now see why.

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By bernard michael
19th Apr 2017 15:53

JRVA wrote:

I have no contracts nor supporting paperwork - client is a law unto themselves! I only have bank statements to work from and am asking constantly for paperwork. Took this client on to help an old family friend who could no longer cope with the accounts for this person - I now see why.

Sounds dodgy - disengage !!
Do you have any contact with the supplier or customer to verify exactly what is changing hands ??

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By JRVA
19th Apr 2017 18:11

It's stage rigging for the entertainment industry. I'm meeting up with my client this evening to try and get to the bottom of it as I'm thinking along the same lines and do not want to get involved. Thanks for everyone's input.

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By Democratus
19th Apr 2017 15:12

What sales? Is the "commission" the "sale" and is it of such a high value that this triggers the VAT Registration?

As mrme89 says - your local theistic aspect of evil can be found resting amongst the singular fact or facts apertaining to the contractual position resting between the parties.

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By JRVA
19th Apr 2017 15:54

I cannot see any commission - I have a sinking feeling it may have been a 'cash' receipt. I have no contracts or paperwork for the funds coming into and leaving the bank account. Would it be negligent for me to omit these receipts/payments from my clients own business accounts as they contra each other out?

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By bernard michael
19th Apr 2017 15:35

Are you sure that your client is receiving his commission with no paperwork from the supplier. This I do not believe
Also
Against what paperwork is the customer in the USA paying your client and not the actual supplier
High value items changing hands with an American customer but no paperwork - I don't think so. What about customs documentation at the very least.
Why is your man scared of VAT. he will receive it from the supplier and pay it to HMRC

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By JRVA
19th Apr 2017 16:04

The only paperwork I have to cover all these transactions going through my client's bank account, is the courier's invoice for delivery of goods going to USA. As I've mentioned in another reply, I have a sneaky suspicion that any commission earned was a 'cash' payment. I'm concerned about triggering VAT registration as this client is extremely bad at keeping and/or providing receipts of any nature and this is another headache I do not wish to burdened with. I'm wondering as these receipts/payments contra each other out would it be prudent (legal even) for me to omit them from my client's accounts?

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By bernard michael
19th Apr 2017 16:05

David
Does this sound like money laundering to you - it does to me

JRVA
File a report and disengage before your collar is felt on an American arrest warrant!!

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