Share of commission / rebate

[Trevor S]

The arrangements are that booking company (B) has signed up a number of venues. Hirers (H) contacts B with their requirements, and B provides a shortlist of suitable venues. H selects their preferred venue (V), and B makes the booking with V.

V invoices H directly. VAT treatment is straight forward – exempt if room hire only and no option to tax, but sufficient additional facilities may result in an overall standard rated treatment.

V pays B a commission. Again straight forward, consideration for a standard rated supply of services by B to V.

B makes no charge to H for organising the booking, and actually pays over a percentage of the commission that they have received from V as a "rebate". On the assumption that H is VAT registered, what’s the VAT liability of H's income?

I’ve discounted the idea of it being a reduction in the consideration for the venue hire, as if it were that, V could simply reduce their charge to H, rather than pass money through B. I’d like to think that its outside the scope of VAT on the basis that H isn’t making any supply to B. But I can’t help wondering whether it may be viewed similarly to the concept of inducements paid by landlords to anchor tenants (as in Mirror Group ECJ case), i.e. having hirers using B makes it easier for B to recruit additional venues, in the same way that securing an anchor tenant for a site makes it easier for landlords to find tenants for the remaining units.

I'd appreciate any thoughts on this aspect of the arrangement!

Thanks