MR T wrote:
Its the VAT that interests me......surely as they take payment from the customer they are liable for the whole of the Vat on that charge..... and not just the VAT on the commission they charge the driver.....or have they been given a special dispensation....U F C
This is something that has interested me for a long time now. According to my accountant, if our company are collecting the money from the customer, in our case the County Council, we are responsible for collecting the VAT from the customer. If we are taking bookings for drivers and the driver is collecting the money then we have no liability for VAT, that would be for the driver to do if they were VAT registered. Also All money paid to the company for use of our vehicles by drivers is subject to VAT. Furthermore, we can't take the money paid to the drivers for account work and deduct this from payments made by the drivers before applying VAT.
As an example if a driver does £100 worth of work for us on account we have to charge the customer £20 VAT.
If the driver owes us £100 inc VAT for use of the vehicle we have to account for £16.67 VAT so we have to account for a total of £37.67 VAT.
We can't say that we owe the driver £100 and the driver owes us £100 so no money has changed hands so no VAT.
Now a friend of mine whose company only do account work and sub all of the work out to owner drivers has been told by his accountant that because his company is collecting the money on behalf of the owner drivers, he does not have to charge the customer VAT. The drivers pay him, well his company, 10% of all earnings. So he can collect from customers say £500,000 and there is no liability for VAT because the income of his company is only £50,000 which is below the VAT threshold.
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