Taxation logo taxation mission text

Since 1927 the leading authority on tax law, practice and administration

New queries, issue 4660

14 August 2018
Issue: 4660 / Categories: Forum & Feedback

Salon services; Puzzling; Alternative basis; Scheme mistake

Salon services

Can a beauty salon owner avoid being VAT-registered?

I act for a beauty salon (sole trader) that is not VAT-registered. As well as doing some of the work herself the owner subcontracts various services to other specialists retaining 25% of the fees. The problem is that the income linked to the specialists will soon take her over the VAT registration threshold if the gross amount paid by her clients is treated as part of her ‘taxable sales’ figure.

Could the subcontractors receive the money directly from the clients and then pay the salon owner a VAT-exempt rent for the exclusive use of a room at her premises?

Needless to say that rent would equal 25% of the fee for the consultation in question. This arrangement will then easily keep my client’s taxable sales figure below the threshold because only her own fees would...

Only subscribers may read the full article

Alternatively, you can register free of charge to read a limited amount of subscriber content per month.
Once you have registered, you will receive an email directing you back to read this item in full.
back to top icon