Reply To: VAT charging on revenue splits

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1 February 2022 at 22:46 #56239
Trevor S
Participant

First question in VAT is always “who is supplying what to who”. The two types of arrangement that I’ve encountered previously are:

  1. Venue is the principal in the sale of tickets to the public – they collect the ticket income and pay VAT on the full sales over to HMRC. Venue then pays the production company for the show. If the production company is VAT registered, they pay the VAT on their share over to HMRC. Either they give a VAT invoice to the venue or the venue produces a self billing invoice – this allows the venue to recover from HMRC the VAT on the production company’s share.
  2. Production company is the principal in the sale of tickets to the public – they collect the ticket income and pay VAT on the full income over to HMRC. Production company pays the venue owner for use of the venue. If the venue owner is VAT registered, and use of the venue is a VATable supply, they will pay HMRC VAT on their share and give the production company a VAT invoice which entitles the production company to recover from HMRC the VAT on the venue’s share.

Your post implies that it’s the first of these. But this should be documented in a formal contract with the venue, as the contract is your “proof” that you’re only required to pay HMRC the VAT on your share – rather than on the total ticket sales, as you would be under the second option above.  The contract should also be clear about the calculation method for payments – i.e. whether they’re a percentage of the VAT-inclusive or VAT-exclusive amounts.

Essentially, you don’t have a VAT issue as such, you have a contractual issue. HMRC will just ensure that you’ve declared VAT on whatever you’ve received. The calculation of the amount you receive is a matter for negotiation between you and the venue.  So check the detail of any contract, make sure that the venue are complying with the wording of it.  If the contract is vague about the calculation, you will need to find some way to reach agreement of interpretation with the venue … and make sure that it’s specified more clearly in future contracts.