Network Marketing and VAT

The current compulsory VAT threshold in the UK is £85,000 – in other words, if your annual turnover exceeds that level you are obliged to register for VAT and complete quarterly VAT returns.

In the case of Network Marketers, turnover is the aggregate of product sales and commissions received. If your annual turnover is below £85,000, it is possible to voluntarily register. Whether or not it’s worthwhile to do so will depend on your individual circumstances, but it is something that we can evaluate for you.

There is a particular aspect to VAT accounting which affects Network Marketers in the UK. The majority of Network Marketing companies pay their distributors their commissions without adding VAT on the basis that the majority of distributors are not VAT registered. If a distributor becomes VAT registered, then they need to invoice their Network Marketing company once a quarter for the VAT on the commissions that they have received in that quarter. The distributor then pays this VAT across to HMRC as part of their overall VAT bill.

You might also be interested to read our blog How much money should I put aside for tax?

At PRB, we have over 30 years’ experience in the Network Marketing sector and are able to assist distributors in the following areas relating to VAT:

  • Dealing with the initial VAT registration
  • Preparation and submission of quarterly VAT returns
  • Preparation and submission of VAT invoice to the Network Marketing company

If you have any queries in relation to VAT, please give us a call on 01444 449502 or email

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