VAT invoicing for revenue credited to client

[Printedout]

I'm looking to take on a new project and part of the deal would be that I'd invoice the client's customers for advertising (standard rated) in the client's magazine.

I will then be providing the client with a printed magazine (zero-rated). When invoicing the client for this I would deduct the revenue already received from their customers for the print, charging them only the difference (if revenue is less than the charge for print) and my service fees on top.

Are there any vat implications by doing this or should I be crediting the revenue in a different way?

[spidersong]

The VAT implications are that your client (if VAT registered) should be charging his clients VAT for the advertising, so you'd need to work out how that would work, how they'd get VAT invoices with your customers details on to his customers, how you'd pass the VAT over or work out a netting arrangement etc.

Also if the paperwork isn't clear then HMRC could end up seeing you as an undisclosed agent and take the view you're making the advertising supply direct to the advertisers and then making you cough up the VAT on the relevant income.

Also you say your 'service fees on top' you'd need to bear in mind that only the provision of printed matter is zero rated, your charges for taking the advertising orders, processing payments, invoicing etc. will be taxable supplies that you'd need to charge VAT on when you're offsetting this income, and if not clearly identified HMRC will be arguing strenuously over how much this actually amounts to when they look at the arrangement.

So it has potential to be a bit messy, but it is doable if you think carefully about it, remembering that this isn't a single supply happening here, there's your supply of printing to your customer, your supply of business admin to your customer, and your customers supply of advertising to his customers, and all the invoicing will need to show the full and proper values for these and it's only the payments that should netted not the basic charges.

[Printedout]

The VAT implications are that your client (if VAT registered) should be charging his clients VAT for the advertising, so you'd need to work out how that would work, how they'd get VAT invoices with your customers details on to his customers, how you'd pass the VAT over or work out a netting arrangement etc.

Also if the paperwork isn't clear then HMRC could end up seeing you as an undisclosed agent and take the view you're making the advertising supply direct to the advertisers and then making you cough up the VAT on the relevant income.

Also you say your 'service fees on top' you'd need to bear in mind that only the provision of printed matter is zero rated, your charges for taking the advertising orders, processing payments, invoicing etc. will be taxable supplies that you'd need to charge VAT on when you're offsetting this income, and if not clearly identified HMRC will be arguing strenuously over how much this actually amounts to when they look at the arrangement.

So it has potential to be a bit messy, but it is doable if you think carefully about it, remembering that this isn't a single supply happening here, there's your supply of printing to your customer, your supply of business admin to your customer, and your customers supply of advertising to his customers, and all the invoicing will need to show the full and proper values for these and it's only the payments that should netted not the basic charges.

Thanks for your reply. I probably didn't make it clear: when invoicing the advertisers the invoice would come directly from my business and include vat which I'd deal with as I do any other revenue into my business. Advertisers would be paying me directly. Effectively I'd be managing the advertising for my client. It's whether or not I can then credit the net revenue amount received from advetising to my client on an invoice to them, deducting it from the cost of their print. Then obviously charging them for my services and any relevant vat for these services.

Net revenue would be deducted from the print first, then any additional services if it goes about the rate charged for print.

Hope that's clear and I know it's fairly messy but this could be crucial to the deal as they're looking to reduce the time spent on admin and sales so looking for a way to do this with my client receiving as few invoices from me as possible.