Here’s a common set up:
A chair renter finishes the cut of one of their clients; then takes her up to the reception desk, where she lets the Salon’s Front of House take the clients payment through the Salon’s own POS and merchant card reader.
How will HMRC view this? Will this sale belong to the self employed renter, or the salon for VAT and tax purposes?
Here’s the answer
There’s a bit of a misconception in our industry that a salon cannot take the payment in this way.
However, this misconception is wrong.
HMRC would look at the whole arrangement between the Salon and its self employed renters (both from the point of view of the contract between them and what is happening in reality). HMRC would do this by going through an agreement that the NHBF and HMRC have in place; as well as using the HMRC CEST tool to determine 2 things:
In our specific example, the NHBF/HMRC agreement includes the following:
Section 4, Money
If your salon does have this arrangement in place, it should ensure it is set up 100% correctly to keep HMRC happy. Who takes the money is just one small part of it!