VAT

PR79

Hi. I'm self employed. I earn 36k a year of commission from a company. I pay my own tax on this. I have 160 customers. They are not my own customers. They belong to the company. I also run fitness classes. This year I'll probably earn about 10k on classes. As the VAT threshold is 37500 I'll earn 46k putting me over the threshold. Do I have to pay/ charge VAT. I obviously can't charge VAT on the company's customers as they are not mine. Any info would be greatly appreciated.

ThumbTaxed

PR79 wrote: »

Hi. I'm self employed. I earn 36k a year of commission from a company. I pay my own tax on this. I have 160 customers. They are not my own customers. They belong to the company. I also run fitness classes. This year I'll probably earn about 10k on classes. As the VAT threshold is 37500 I'll earn 46k putting me over the threshold. Do I have to pay/ charge VAT. I obviously can't charge VAT on the company's customers as they are not mine. Any info would be greatly appreciated.

The company pays you commission re work on these customers. It is the company to which vat should be charged.

Over threshold for services so vat to be charged

tanit

PR79 wrote: »

Hi. I'm self employed. I earn 36k a year of commission from a company. I pay my own tax on this. I have 160 customers. They are not my own customers. They belong to the company. I also run fitness classes. This year I'll probably earn about 10k on classes. As the VAT threshold is 37500 I'll earn 46k putting me over the threshold. Do I have to pay/ charge VAT. I obviously can't charge VAT on the company's customers as they are not mine. Any info would be greatly appreciated.

If the company sales are below the 37,500 turnover per year, the company is under the threshold and doesn't need to be registered for Vat. But once is expected to be over the threshold over a 12 month period it would need to be registered for the Vat. The income you receive from the company is PAYE income and outside the scope.

If you run the classes independently from the company you are acting as a sole trader and that means you would need to fill out a F11 at the end of the year accounting for your PAYE income and the income from your fitness trade. If the income from your fitness trade is below the threshold (in your case it is) you as a sole trader won't need to be registered for Vat and won't need to pay Vat until your reach the thresholds on your fitness activities.

In this case there are two taxpayers: the company and the sole trader, and for Vat purposes they are independent and incomes should not be added to each other as they are unrelated.

That said Revenue might consider that you are trying to evade taxes and try to query the whole thing. If the company's activities are not fitness related you shouldn't have an issue but this is not legal/tax advice and i'm not responsible of any issues you might end up having them so consult with a tax advisor properly and get their advice

ABEasy

Tanit think you misread to op. Op you need to register for vat, & charge both the company and your individual clients vat. The company will most probably be entitled to an input credit on the vat you charge so you should add the vat to your fee, whereas i assume your income from the individuals is price sensitive and you may need to absord the vat yourself.

On another note, you could be classed as an employee for the company fees, google revenue employee v self employed. If you are re classified as an employee, only the individual income counts towards the vat registration threshold.

tanit

ABEasy wrote: »

Tanit think you misread to op. Op you need to register for vat, & charge both the company and your individual clients vat. The company will most probably be entitled to an input credit on the vat you charge so you should add the vat to your fee, whereas i assume your income from the individuals is price sensitive and you may need to absord the vat yourself.

On another note, you could be classed as an employee for the company fees, google revenue employee v self employed. If you are re classified as an employee, only the individual income counts towards the vat registration threshold.

Before I write anything else I'm a student accountant and that's why I added the whole disclaimer at the end of my post.

I'm not sure if I'm understanding you well but as far as I know if you are a PAYE employee your income does not count towards the threshold along with self employed income. I'm setting a scenario where you have two taxpayers:

• the company with its income that may or may not be over the threshold needing registration and everything that goes with it
• and the sole trader that has occasional fitness income of about 10k/year

As I'm not sure what the company does if the trade is unrelated to fitness Revenue might not have any issues with the whole thing going as him as a PAYE taxpayer (the company may or may not need to apply for Vat registration) and side fitness thing/trade way below the threshold not needing to register for Vat. It's similar to the debate of a hobbyist making a profit and being liable to CGT on occasional profits or having to full blown register as a trade with all the Vat and tax implications of a trade/hobby

GrumpyMe

PR79 wrote: »

Hi. I'm self employed. I earn 36k a year of commission from a company. I pay my own tax on this. I have 160 customers. They are not my own customers. They belong to the company. I also run fitness classes. This year I'll probably earn about 10k on classes. As the VAT threshold is 37500 I'll earn 46k putting me over the threshold. Do I have to pay/ charge VAT. I obviously can't charge VAT on the company's customers as they are not mine. Any info would be greatly appreciated.

I can see how the confusion might arise given that you say you're self employed - meaning the income you have is not PAYE. You earn commission from a company - a system which is often processed via PAYE.

As I understand it, you are as you say self employed - and you are ONLY self employed (regardless of income source) and if you expect to exceed the VAT treashold during your financial year, you must register and charge VAT for the whole of your financial year - not just once you exceed the treashold.

To be honest here might be a place to get pointers but where VAT is concerned you really should pay for the best qualified advice.

ThumbTaxed

Very simple... read my post above.