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Where Taxpayers and Advisers Meet

Vat scenario in driving instructor, need help.

Samdrivinginstructor
Posts: 1
Joined: Mon Dec 03, 2018 10:18 pm

Vat scenario in driving instructor, need help.

Postby Samdrivinginstructor » Mon Dec 03, 2018 10:34 pm

Hi need help on this.

As an instructor I obviously don't charge vat to my students. One I'm not vat registered and two if I was vat registered my prices would be too high for learners would want to take any lessons from me.
For that matter, no driving instructor is vat registered. I've been made aware that hmrx has not made this exempt. For someone in need to learn how to drive to get a prospective job whilst having to pay vat... Come on hmrc.
OK anyway.. Back to my question.

I want to create this mobile-app, where by instructors could create a Facebook style page and can then also set their availability on a live calender.
Learners will be able to book and pay online.
Once lesson is complete payment goes to instructor. Who as mentioned isn't vat registered.

There will come a point that my service will pass the vat threshold, and I'll have to charge vat. I'll immediately lose the instructors, and learners won't want to pay the extra 5 odd pound extra.

I know at the moment uber is fighting this case, I mean there not a taxi company and don't own or run any transportation company. They are literally a facilitator.

Please enlighten me.

Sam

robbob
Posts: 2766
Joined: Wed Aug 06, 2008 4:01 pm

Re: Vat scenario in driving instructor, need help.

Postby robbob » Tue Dec 04, 2018 9:41 am

There will come a point that my service will pass the vat threshold, and I'll have to charge vat. I'll immediately lose the instructors, and learners won't want to pay the extra 5 odd pound extra.

I know at the moment uber is fighting this case, I mean there not a taxi company and don't own or run any transportation company. They are literally a facilitator.
I wouldn't want to post my opinions on Uber on a public forum, blame rests with hmrc though for not ensuring they are treated in exactly the same manner as other UK based taxi provider "transport company" who provides a similar service. If hmrc can't operate a fair and transparent system for legitimate uk entities who pay rates/ corp tax and vat and who employee uk people so that they are not at a disadvantage it's more than a bit of a disgrace.

Anyway rant aside - all UK based businesses must deal with vat when they exceed the threshold so you are in the same boat as many and you just need to deal with that unless you can find the ability to create an offshore entity.

Getting back to your situation there is thankfully the option of setting up as an agent on behalf of the drivers (like Uber pretend to be) so that only your "fee paid/commission received" to the driver would be subject to vat and therefore you would follow the more normal route of simply paying vat on your "cut" which is nice and fair and will help pay for my nursing home unlike nasty Mr Uber.(oops off again) Note this is an area where you should get specific experienced advise to ensure the arrangements are set up in such a manner as to ensure there is no issues with the vat office - at a minimum buyers must be aware they are buying directly from the driver and and not you - you are as you say only the facilitator or "disclosed agent" (not so secret) as hmrc tend to call it officially, great care needs to be taken to ensure everything is done correctly though to keep hmrc happy.


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