I am working on a business plan to provide an online service to match UK clients ( general public ) with a UK service provider ( eg computer repair ).
To streamline the system, I want to collect full payment from the customer at the point of matching them to their service provider, and then pass the relevant portion on to the service provider, taking a cut for myself.
The services provided would be eligible for VAT subject to business turnover, but it is likely that I will work with a large number of service providers where their individual turnover does not meet the VAT threshold. Conversely my matching service, all being well, would pass the VAT threshold.
If my company takes payment in full for the service, and then i have the service provider invoice me for his/her amount I believe I would be required to add VAT to the total amount which makes the business a non-starter. However, if I collect payment from the customer in such a way that two simultaneous transactions occur - one to hit my books for the required amount, and one to hit the service provider then am I correct in thinking my company would be responsible for any VAT on my portion, and the service provider responsible for any VAT on his/hers?
Any advice or ideas on how to structure this, or links to HMRC very gratefully received.
Alex
Source: http://www.ukbusinessforums.co.uk/forums/showthread.php?t=287434
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