Hello all, I need a little bit of help. Here's a little background: See I run a small personal training business on the side of my day job, nothing too big& it doesn't turn over much, it's more of a hobby than a career. I use a studio to train my clients in, the owner of the studio also owns a gym and charges me 30% of my earnings for the use of his space. Collectively the studio and the gym he owns turns over way more than the £85,000 VAT registration bracket. I myself am a sole trader, separate to the studio/gym business, I do not turn over anything near that bracket.
All of my income from clients goes into the studio's business bank account, I then invoice them at the end of the month and they will transfer me the money minus the 30% cut. I have been paying VAT on this money ever since I started with the studio. I'm not the most business savvy guy so I'm not sure if this is correct to start with but the plot thickens. When I started with the studio, the owner assured me that eventually he was going to separate the gym and the studio in to two different business entities, at that point I will no longer have to pay VAT because the studio (which I am affiliated with) will not be VAT registered due to turning over less than £85,000 per year whereas the gym (Which I am not affiliated with) turns over more than that and will remain VAT registered. This actually happened in January, so the studio and the gym are completely separate entities now, and I was only in contract with the studio however the owner has continued to charge me VAT. My hourly rate is £40 per hour, and he charges me £5 VAT for every hour worked.
My issue is that for the whole time I was using the studio, I have been paying VAT even though I am not VAT registered because I was under the impression that due to the studio/gym business being VAT registered, I too would have to pay it. Now that the studio is not VAT registered, I am still being charged VAT and I'm adamant that I'm being hard-done-by, can anyone advise on whether I'm supposed to be paying it? And if not what do I do?
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