Readers' forum: Introductory fees

My client is a financial adviser (sole trader) who is VAT registered and acts for very wealthy individuals. He is not taking on new clients and refers a prospective business to another adviser whom he rates highly. There is no contract between my client and the other adviser for any commission or introductory fee – but the other adviser has been generously giving my client £300 for each lead. In the past 12 months this has totalled £3 300.

My client says he has not accounted for VAT because the payments are in effect donations a view that has some logic but on which I have my doubts. Unfortunately the other adviser is not VAT registered so issuing a VAT-only invoice would not be a solution.

Query 19...