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Sam
Sam, Accountant
Category: UK Tax
Satisfied Customers: 13657
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Capital Gains, CIS ask for Sam Tax
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I have a joint venture with a business contact to supply

Customer Question

I have a joint venture with a business contact to supply comedians to a cruise ship. We share profits but are both sole traders. I have the contract with the agent who supplies the comedians for performances in international waters. The agent insists on charging vat although the fee for each artist is listed in the contract and their services are performed abroad. My colleague has the contract for the fee payable to the artists by the cruise liner and manages them whilst on board the ship . The cruise line does not pay vat . I need to recharge my colleague for the cost of the artists which he says should not be subject to vat only my share of the profit is vatable . Is he correct
Submitted: 2 months ago.
Category: UK Tax
Expert:  Sam replied 2 months ago.

HI

You cannot both be sole traders as you are working together towards the same end goal so are partners and should be operating as such.

So no your partner is wrong the whole position is subject to VAT and should be so within the whole of the profit position - and he then take his share of the partnership profits.

How you are trading is wrong in the eyes of HMRC and this needs to be rectified- you are artificially separating the business both for tax and VAT purposes

Please advsie if I can assist further

Thanks

Sam

Customer: replied 2 months ago.
Are you sure that we should account to HMRC as partners as most of the time we carry out our own business and only work together occasionally maybe once or twice a year when we share profits according to how much work we each contribute to the deal. The contract with the agent list the fee payable to the artists for their overseas performance should he charge me vat?
Expert:  Sam replied 2 months ago.

HI

Thanks for your response

Yes I am sure - as the fact you share profits indicates a partnership and not you asking for professional assistance from a separate business.

If one took the lead and then paid just fees to the other and that you offered different services to all your clients then maybe you could be treated as separate businesses but this does not appear to be the case here or you need to restructure the way you operate so there is a separation of business.

But currently the way in which you operate all is subject to VAT - you cant charge some and not all

Thanks

Sam

Customer: replied 2 months ago.
Is there vat chargeable because the comedians are not invoicing the cruise liner direct ? My invoice to my colleague states fee for supply of comedians for my share of the gross profit from the deal we each bear our own operational costs so it is impossible to work as a partnership and I don't really believe we are I am concerned about the vat more
Expert:  Sam replied 2 months ago.

Hi

Thanks for your response

I cannot give you that answer re the VAT as you are not operating as you should with this specific venture, all I can do is advsie you how you should be operating, and on that basis advsie that VAT is due for the services you supply.

If I did not highlight the way you are operating as incorrect for both tax and VAT purposes, I am sure you can appreciate that would make me an ineffective tax adviser!

The way you are operating is tax and VAT evasion, I cannot say more than that. I have answered the question and given you advsie re the VAT based on how you should be legally structured.

Thanks

Sam

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