Agent or Principal is a key platform of VAT. The other key platform to understand is ownership of the goods. When you sell art directly, you are the principal, that is, you own the goods and you are selling those goods to a customer. When you sell via an exhibition, you have to establish who owns the goods that are being sold. Option 1 is you sell the goods to exhibition and then they sell the art to customer (so exhibition own your art and they take the risk if they can't find a buyer and it is rare to see this kind of set-up). Option 2 is where the exhibition are merely an agent in facilitating the sale between you and the customer. The goods are always yours, the exhibition set a price but it's still your ownership. When customer buys art, the sale is between you and customer although the exhibition will facilitate that and so the exhibition may raise the paperwork and handle the paperwork. HMRC will not know the contract you hold with the exhibition so HMRC are not going to be able to help give an explicit answer, neither can I, without sight of the agreement you hold with the exhibition or giving more details as to who is doing what - and each exhibition/organiser may have different terms, but trust the above explains the basics. So, in your original question, if the exhibition are taking a commission, it suggests they are agents, so the sale of art is between you and the customer. Exhibition charges a percentage fee and if the exhibition is VAT registered, their commission will be plus VAT (which you can reclaim) and if the exhibition is not VAT registered, then their commission will be without VAT. In other words, there are two transactions going on here. Transaction one is you selling art to customer, so you charge VAT to customer (assuming this is a UK to consumer sale). There is then a second transaction between you and exhibition, whereby they charge you for organising everything. The selling price is the selling price, that is what you charge VAT on, you do not calculate VAT on the money you receive after commission. Again, two separate transactions...you sell art for £100 + £20 VAT (£120 total), exhibition takes a commission of say £60, you receive £60 into your bank. The value of your sale is not £60, it is £120. So you declare output tax of £20, not £10. You have £120 sales minus £60 cost of making that sale/commission....all of this assumes you are the principal selling at all times and the exhibition is acting as your agent, again, it depends entirely on the contract you have and this example here may or may not reflect your actual situation but is used here to explain how there are two transactions going on at the same time.
