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Olympic task

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09 February 2010
Issue: 4242 / Categories: Forum & Feedback , Business , Income Tax
A business is involved in arranging accommodation for competitors and supporters at the 2012 London Olympic Games. A retainer is received as well as commission payments that are potentially refundable if the games are cancelled. How these payments are to be taxed and the implications of UITF40 are examined

My client’s business is arranging hotel bookings in London for German competitors and supporters at the 2012 Olympics.

 He receives a fixed retainer of £2 250 per month for his work from the travel company he is contracted to plus an extra £450 per month advance commission. His final commission from the travel company in 2012 will be based on 4% of the total value of bookings for the travel company.

If this is less than the total of the £450 per month amounts he has received on account he must pay some of this money back.

So if the games are cancelled for example because of a political crisis then he will have to repay the total of the £450s back to the travel company because all the bookings will be void.

For self-assessment purposes is all of the commission taxable in 2012/13 when...

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