VAT when self employed in a salon?

[Xx-melo-xX]

I've just started at a new salon. Agreement was 50% as owner provides all products. Money from clients goes through till as easier for me and them and I use the salon's prices.
Just been informed that as vat comes out of what the client pays that I actually only make 40% of what they pay. Is this correct for being self employed? The salon is vat registered but I myself am not...

 

[FlawlessBeauty]

If you have a look through the search function i remember someone else going through this recently.

Personally i would expect it to get split 50/50 then they would take 20% of off their half. So if the client paid £20, you would get £10 and they would have to pay £2 vat and keep £8 themselves.

I think it's a bit of a grey area x

 

[AcidPerm]

Firstly, I'm not an accountant so this may not be completely accurate.

My understanding is that as the salon is registered to charge VAT, the owner has to charge VAT on the services she provides to you, as the contractor.

You, however, cannot charge 'your clients' VAT as you're not VAT registered.

It's complicated further by the fact that your clients are paying into her till so all the monies in the till are included in her overall takings.

Further, the till receipts given to your clients will probably show a VAT element, which they probably shouldn't do.

It might be worth asking your salon owner to speak to her accountant and and ask for clarification for each point mentioned above?

 

[salonfrog]

As the salon is VAT registered, it will add VAT on to the amount it charges you as a self employed person in providing you rental space.

The clients that you service should not pay VAT on the amount they pay to the salon ( since their contract is with you and you are not VAT registered).

So you should end up owing the salon 50% of the income taken from clients on your behalf (no VAT) + 20% VAT on top of this total.

Hope this helps but just ask if you need more clarification.