Agent Charging VAT?
Here are some things you might want to know…
WHAT IS VAT?
VAT = Value Added Tax
(currently the standard rate in the UK is 20%)
VAT is a government tax applied to most goods and services in the UK. It’s designed to be paid by the end consumer, meaning that when a VAT-registered business provides a service (in this case, an agent charging commission) they must add 20% VAT on top of their fee and pass that amount on to HMRC.
This is why actors working with VAT-registered agents may see an extra 20% added to their commission fees - because the agent is legally required to charge it.
An agency must register for VAT if their VAT-taxable turnover (the total value of their commission) exceeds £90,000 in a 12-month period, and they must be registered with HMRC in order to legally charge and collect VAT. (Generally VAT registered agencies tend to be the bigger ones - with larger talent rosters and a higher number of agents working there)
When an agent is VAT registered you (the actor), as a client, pay:
Their commission + 20% VAT
Eg...
If your fee is £1000 and your agent takes 15%,
Commission = £150
VAT is 20% of that commission
VAT = £30
Total deducted from your fee = £180
THINGS YOU SHOULD KNOW
If an agency becomes VAT registered during your time working with them, client contracts must be updated and all clients should be informed.
If you are joining an agency that is already VAT registered, by law you must be informed in advance and it should be stated in the contract.
VAT charges should not be:
-Sprung on you verbally
-Hidden in remittances without prior agreement/warning
-Charged without agent being VAT registered
-Charged without providing clients a VAT receipt
-Charged on fees that are not applicable (chaperone fees, actors expenses/per diems, travel costs etc. Agents should not be taking commission on these in the first place, therefore no VAT should be applied.)
You have a right to ask agents:
Are you VAT registered?
Can I see your VAT number?
Can I have proper VAT receipts for my records?
Can you remove the VAT charge from these non-commissionable fees?
Any agent who charges VAT should clearly state in their contract that VAT will be charged, provide you with a VAT registration number, and give you a VAT receipt with every payment you receive.
Any actor, whether represented by a VAT registered agent or not, should always receive a remittance any time they are paid (a document that breaks down the payment details for that job)
Each remittance should show:
-The total amount paid by production
-The commission taken by your agent
-A breakdown of deductions
-The date the payment was received from production
-The date it was sent on to you
(by law this should be within 10 days of the date showing when the agent was paid)
If the agent is VAT registered, they should also include further information. According to gov.uk all VAT invoices should include:
-An invoice number
-The agency’s name, address, VAT registration number
-A description of what the charge is for
-The invoice date
-The net amount (before VAT)
-The VAT rate applied
-The VAT amount
-The total amount due including VAT
VAT registered agents tend to include this information in the general payment remittance, but if they don’t - you should be given a separate VAT receipt so you have a legally valid record of the VAT you’ve been charged. This is important for your own financial records, and essential if you ever need to reclaim VAT (if registered yourself).
Some agents may:
-Not update on/inform of VAT charges in advance
-Fail to mention VAT charges in writing or contracts
-Not provide VAT receipts
-Charge VAT without being registered
(this is illegal)
You can check VAT registration via the
HMRC VAT checker.
If something feels wrong, review your contract...
Does it mention VAT? If not, and you haven’t been informed prior of VAT charges, this may be unlawful. Make sure to ask questions in writing, keep all payment records, and report concerns to: Equity, HMRC, EASI.
Transparency is not optional. You have a right to understand where your money is going.
Written by Alexa Morden
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