It looks as though the issue may be the wording of the contract. I actually think it can be interpreted in two ways. This is the relevant clause:
“5.2 Box Office Split Fee. A set percentage of the total gross box office takings that the Visiting Company will receive will be agreed prior to issuing the contract. The Box Office service charge, PRS and any Royalties due will be deducted from the gross box office takings before the split percentage that has been agreed is calculated. After the final performance XXXX will issue an invoice to the Visiting Company. This will then be deducted from gross box office takings and the balance returned to you. All payments (unless stated otherwise) are exclusive of VAT which is payable (where relevant) by you.”
Confusingly, they have included contra charges such as PRS, box office service charge and royalties which are subject to VAT, within the same clause. Because I am used to operating in the way I described in my initial post, I disassociated the first sentence from the final sentence as I didn’t regard the box office split as a “payment” or “cost” per se. I read payments in this context to mean contra charges which a revenue split isn’t.
So are you saying I am wrong to dispute this clause if I have already agreed it? Bearing in mind I assumed (incorrectly on this occasion) that the venue understood what I meant by percentage split of net revenue.
What I failed to mention is that the venue don’t necessarily sell all of the tickets on behalf of the visiting company. Quite often ticket allocations are given to external ticket agencies to sell tickets. So whereas you are saying that the venue are entitled to charge VAT in addition to their share of sales as the “supplier”, they haven’t necessarily sold all of the tickets. They are not “banking” or declaring 100% of the ticket revenue because the ticket agency revenue goes direct to the production company. They would only be paying VAT on what they have received.