complicated V.A.T matter

[bambinou]

Hi All,

I have a very complicated vat problem and really need a little help, i have had a few meeting with an accountant but still unsure on how everything works.
here i start,i hope you will understand my rusty english(second language).

first of all i am V.A.T registered in England

I am starting a company on the net that will help the musical artist to sell their songs online, it sounds easy but in fact it is a little nightmare,all i need today is a little help from you so i can tell the programmers to change the codes of the website in order to get everything following the uk law.

Let's say an artist upload his tracks to his account that he created on my website, he/she sells a song to a customer at £0.99(vat inclusive),this mean i have sold the mp3 at £0.84 and charged £0.15 of vat.

now let's multiply the numbers by 10 to make everything a little easier, the artist has sold 10 songs at £0.99, all together i have charged the customers £9.99 for 10 songs (V.A.T inclusive).
At the moment all this cash still on my business account till the artist sned me a payment request.

Now let's say i receve a payment request form the artist, i now have to pay the artist 70% commission on the £9.99,that is £6.99 .

Now where i am really really confused is here:

If the artist is V.A.T registered i need to repay the V.A.T back to this person that would be £5.95 + £1.04 of V.A.T ,is that right?

But now i have to paid the .V.A.T to that person i need to produce an electronic V.A.T invoice(no problem for that) but i also need an invoice from this artist right????

I am completly lost on the process of repaying the V.A.T to the artist, how everythinf works?Do i need to ask for an identity proof from the artist before repaying the V.A.T?If yes how would you do this online?

Thank you so much for your help, i have seen my accountant twice but still so confused...i am a little annoyed to see her again with the same questions.every time she speaks to me i haven't got it on paper, i work on the site for 2 weeks to other stuff and forget it......it is so expensive to pay a programmer to create some code that i cannot afford to get it wrong.


Thanx everyone!!!


BamBam

[fisicx]

You bet bet would be to speak to you local HMRC office. They provide free VAT advice. If you are not in the UK then this is a good place to start: http://www.hmrc.gov.uk/ they have an excellent online service.

[bambinou]

Thanks my friend,

I have just called them and they are not really helpfull.I have explained the full problem and told me i have to look on their website for the V.A.T information sheet 01/03 and this is all they could do......i have been on it,found the sheet and really it does not help.

[Ian J]

Your sale price for 10 songs is £9.99 which comprises £8.51 for the goods plus Vat of £1.48

If you pay commission to the artist at 70% they need to invoice you for 70% of £8.51 which is £5.95 to which they will need to add vat of £1.04 if they are Vat registered but if they are not Vat registered the invoice will be just for the £8.51

Their invoice to you will contain details of their Vat registration number if they are registered.