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Readers' forum: Style windfall

08 July 2019
Issue: 4703 / Categories: Forum & Feedback
VAT treatment of unspent wardrobe budget

It is common for stylists to receive a budget or float to purchase clothes for someone in the media to wear at a particular event or to dress a group in a film. Generally this budget is separate from the stylist’s own fee which is invoiced separately and subject to VAT.

We are concerned about the tax treatment of the wardrobe budgets. If for example a stylist receives a £5 000 budget and spends only £4 000 the extra £1 000 is meant to be returned. On this basis we do not include the £5 000 as the stylist’s income for either direct tax or VAT purposes. Similarly we do not include the clothes purchased as a business expense. The problem arises when the extra £1 000 is not returned. We understand this is a grey area in the industry and sometimes unspent budget is not given...

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