What Tax To Pay On A Money Holding Website

BusinessGuy

Hi There,

I have a question that my accountant is going to charge me a significant amount to answer so I said I would try here first and get people's ideas.

I have a question on a potential website start up and just wondering how the tax/VAT side of things would work. Any information you could give me would be great. Here is the question:

The website that I may set up would be running competitions. So you could run a competition with your friends and use the website to collect the entrance money from everyone. So lets say you wanted to collect 10 euro from 10 of your friends. You could use this new website to email 10 of your friends and they would log on to the website and pay the 10 euro. The website would charge them 10 euro and 90 cent. The 90 cent would obviously be my profit in the situation. Once the competition then ends you nominate 1 of your friends who should receive the 100 euro prize money, you do this through the website once the competition is over. I would then wire transfer the 100 euro to the winner.

My question is, how does this work for VAT, do I have to charge VAT on the 10.90 or just the 90 cent. How would it work if I had the 100 euro in my bank account going over year end, would I have to pay some kind of tax on this even though I am just holding the 100 euro for the winner.

It would be through my limited company in case that makes a difference.

Thanks
BG

dbran

Hi

Seek professional advice on specific tax/vat questions please.

This is supposed to be a general discussion forum about accountancy in general.

Regards

dbran