I doubt they are acting as a sales ledger department, though I don't know for sure.
But they keep 50% of the proceeds, so are they charging output VAT on their 50%?? (I know you can't answer that). And only charging it on the franchisees 50% if they hit the VAT threshold?
Presumably the franchisee would have the right to see these invoices which are being raised on their behalf? I don't think they are currently shown them. Also, if what you suggest is true, wouldn't that mean that the franchisor would be raising 2 x invoices for each sale, one for their 50% and one for the franchisee's 50%?
Can you see my confusion with all this?
I just don't think its fair that my franchisee is being forced to either not grow, and stay below the completely outdated threshold (even with the new uplift) or take the FRS hit of 12.5%. Its barely worth doing the business IMO.
The franchise agreement says, We will raise invoices on behalf of your business. And they refer to payments to the franchise as coming from a "collections agent".
Can a business raise invoices on behalf of an entirely separate entity? I haven't heard of that before.
Also, I can't work out if the franchisor is charging output VAT at the point of sale to the payer? They seem to transfer all VAT responsibility to the franchisee if and when they hit the VAT threshold? Is this even legal?
I'm totally confused.
Thanks for your help so far.
Also, I suspect we probably need specialist VAT advice, can we get this from HMRC themselves? Or do we need to appoint an adviser? My client does not have huge resources for legal costs.
Thanks so much. This is my point exactly. I don’t fully understand the agreement, I never have, it’s not really my job to, but I’m trying to help as my client didn’t earn a great deal in the first place and now has an extra 12.5% straight off the top line (FRS) and I think some of this franchisor accounting is just weird frankly! But I don’t see why the franchisee shouldn’t be able to raise a VAT invoice for what they are paid that the franchisor then claims back?!
My answers
I doubt they are acting as a sales ledger department, though I don't know for sure.
But they keep 50% of the proceeds, so are they charging output VAT on their 50%?? (I know you can't answer that). And only charging it on the franchisees 50% if they hit the VAT threshold?
Presumably the franchisee would have the right to see these invoices which are being raised on their behalf? I don't think they are currently shown them. Also, if what you suggest is true, wouldn't that mean that the franchisor would be raising 2 x invoices for each sale, one for their 50% and one for the franchisee's 50%?
Can you see my confusion with all this?
I just don't think its fair that my franchisee is being forced to either not grow, and stay below the completely outdated threshold (even with the new uplift) or take the FRS hit of 12.5%. Its barely worth doing the business IMO.
Thanks
okay, so I have a bit more info on this.
The franchise agreement says, We will raise invoices on behalf of your business. And they refer to payments to the franchise as coming from a "collections agent".
Can a business raise invoices on behalf of an entirely separate entity? I haven't heard of that before.
Also, I can't work out if the franchisor is charging output VAT at the point of sale to the payer? They seem to transfer all VAT responsibility to the franchisee if and when they hit the VAT threshold? Is this even legal?
I'm totally confused.
Thanks for your help so far.
Also, I suspect we probably need specialist VAT advice, can we get this from HMRC themselves? Or do we need to appoint an adviser? My client does not have huge resources for legal costs.
Thanks so much. This is my point exactly. I don’t fully understand the agreement, I never have, it’s not really my job to, but I’m trying to help as my client didn’t earn a great deal in the first place and now has an extra 12.5% straight off the top line (FRS) and I think some of this franchisor accounting is just weird frankly! But I don’t see why the franchisee shouldn’t be able to raise a VAT invoice for what they are paid that the franchisor then claims back?!
Hi there
How do you account for purchases made while travelling in the EU, e.g. fuel for a truck driver?
So the local VAT has been charged at POS.
Do you use the reverse charge system in this circumstance?
Thanks
Dan