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Posted Sat, 04 Feb 2023 10:57:10 GMT by Ian Marlow
Hi, I am a sculptor and registered for VAT. Selling work to my own clients is fine, they get charged 20% VAT. The problem I have is when selling through exhibitions that take a commission fee on the sale when the exhibition organisers A) are not VAT registered, or B) are VAT registered. In both cases I am not the direct seller. The exhibitions sell on my behalf. In the case of A) the exhibition sets the price of the sculpture which includes their commission. If the sculpture sells, I get the price paid less their commission (the commission can range from say 25% to 50%). Should the VAT I pay for that sculpture be on the final price or just on the payment I receive from the exhibition? In the case of B) the VAT must be on the sale price if they are VAT registered, but we can't both pay that VAT so I assume I just pay the VAT on the figure I receive. There must be a right way of doing it for both, where I am not the direct seller. Your advice would be welcome because it's confusing me. Thanks Ian
Posted Mon, 06 Feb 2023 15:22:26 GMT by HMRC Admin 17
Hello ,

Please refer to section 23 regarding the invoicing and accountng for the VAT :

VAT guide (VAT Notice 700)    .

Thank you.

Posted Mon, 06 Feb 2023 15:47:03 GMT by Ian Marlow
Thanks, but that is mind-boggling. It really is. Could someone in HMRC who understands what it says please just answer the questions above in a way that makes sense to a layman? .... Please? Thanks Ian
Posted Tue, 07 Feb 2023 09:22:28 GMT by Jason Croke
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 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.

Posted Tue, 07 Feb 2023 13:36:29 GMT by HMRC Admin 17

Unfortunatley we can only refer you to the guidance regarding the invoicing of these transactions
we cannot provide a definitive answer   .

Thank you.
Posted Tue, 07 Feb 2023 14:38:26 GMT by Ian Marlow
Thanks for taking the time to reply, Jason. That makes sense and is a far better explanation than the guidance offers. Ian

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