A: It depends! As the gallery never takes ownership of the art it is agent in relation to the art sales but, for VAT purposes, there are situations where it would be treated as selling the art itself… If the gallery is a disclosed agent where it clearly sells the art on behalf of, and in the name of, the (disclosed) principal / seller, only the gallery’s commission counts as its turnover for VAT purposes and it is still well below the VAT registration threshold. If, however, the gallery is an undisclosed agent where it acts in its own name when selling the art (principal undisclosed) then it would be treated (for VAT purposes only) as if it has both bought the art from the artist and sold the art on to the customer. In this scenario the gallery’s turnover will include the full art sales values and it would therefore have breached the VAT threshold already; it may have late VAT registration penalties and will also owe HMRC the VAT on the full value of art sales made since then. To ensure disclosed agency VAT treatment, the gallery needs to make it clear to all parties that the art is sold by the seller to the customer and that the gallery is merely an agent. This should ideally be clear from Ts&Cs, signage in the gallery and paperwork (e.g. till receipts / invoices). If the paperwork / signage is unclear or silent on this matter, HMRC will follow the payment trail and likely conclude that the gallery is acting as undisclosed meaning the full sales value is included in the gallery’s turnover.