Emma A

We are a small actor's agency and recently decided to register for VAT but are now wondering whether this was in fact the correct decision because it may actually transpire that our taxable 'supplies' will be nowhere near the threshold. Having conducted further research and read numerous articles it seems that we were mistaken in thinking that there would be a requirement for the Company to charge VAT on invoices to production companies for services that are provided by our clients ('actors') if our clients are themselves not VAT registered. As none of our current clients are VAT registered - I am unaware of any actors who earn below the VAT threshold as being VAT registered - it seems somewhat pointless to be VAT registered, other than the small benefit of reclaiming VAT on our outgoings for operational costs. I have read articles saying that if the Agency is VAT registered then you have to charge VAT on the invoice to the production company and that you also have to charge VAT on the commission element that you charge the Client (actor). So for example if the actor has undertaken a shoot and the total for that shoot (the buyout, basic studio fee etc) is £1000 then the Agency raises an invoice to the production company for £1200 (£1000 + £200 VAT). The Agency then has to charge VAT on the commission element (10% of £1000) which would mean charging the actor £120 (£100 + £20 VAT). On the other hand people are saying that unless the actor is VAT registered then the Agency does not charge VAT on their invoice to the production company. We operate a system where the actor invoices the Agency so before we were VAT registered and using the example above the actor would have invoiced the Agency £900 i.e. £1000 minus 10% commission of £100. Simple! The Agency never raised invoices to the Client (actor) it was always the actor invoicing us. If the first scenario is the correct method them I am presuming that the actor would invoice the Agency for £880, this being the fee of £1000 less £120 i.e commission of £100 (10%) + VAT of £20. I read a forum article in which 'HMRC Admin 21 Response' provided an answer to a question that related to an actor's agency and VAT so wonder wether they would be able to assist please if they are a specialist in this area? Thank you