Hi,
I have an agreed settlement for an infringement from a company who used my photography. I'm not sure if I should be adding VAT and obviously then declaring VAT.
Would the payment be VAT applicable and also should its be classed and taxed as income?
Thanks
Infringment and VAT rules UK
Re: Infringment and VAT rules UK
Hi pkpk8 and welcome,
I'm going to be very brief because this forum is not here to give advice on tax matters. First of all, are you registrered for VAT? If not then you can't charge VAT. If you are registered then, since 2020, HMRC has classed any compenstation of this sort as a supply and therefore you do need to show the VAT payable separately from the agreed amount of the settlement figure, or split it out from the grosssed up figure. (see this HMRC Brief)
The compensation is also considered to be income, so if you are self employed or a sole trader, so you may need to include it in your tax return.
If you need further details you should consult an acccountant or tax consultant.
I'm going to be very brief because this forum is not here to give advice on tax matters. First of all, are you registrered for VAT? If not then you can't charge VAT. If you are registered then, since 2020, HMRC has classed any compenstation of this sort as a supply and therefore you do need to show the VAT payable separately from the agreed amount of the settlement figure, or split it out from the grosssed up figure. (see this HMRC Brief)
The compensation is also considered to be income, so if you are self employed or a sole trader, so you may need to include it in your tax return.
If you need further details you should consult an acccountant or tax consultant.
Advice or comment provided here is not and does not purport to be legal advice as defined by s.12 of Legal Services Act 2007