VTAXPER69000 | Particular trades: Hairdressing: Accounting consequences

• If the stylists are employees of the salon, the salon supplies hairdressing services to the customers, and must declare output tax on the gross value. Monies paid by the salon to the stylist are payment for the services of that stylist as an employee, and are outside the scope of VAT.

• If the stylists are self-employed contractors who supply their services to the salon, the salon must account for output tax on gross takings. Monies paid by the salon to the stylist are consideration for a supply of services. The stylist must declare output tax if registered or registrable.

• If the stylists supply their services direct to customers, output tax is only due on their individual gross takings if their level exceeds the registration threshold. Monies which they pass back to the salon are consideration for supplies of services by the salon. The liability of this supply may vary; you will find further guidance on this in Section 8 ofV1-8:Land and Property.

Apart from the fact that any supply of services by the salon to the stylist is not always standard-rated, the accounting consequences are similar to those for driving schools. These are illustrated in the driving school diagrams and in the tables in VTAXPER66600.