Thread: VAT on commission

If that company buys a press ad or a CPM based campaign will they be paying VAT?

Course they are!

Their affiliate agreement might state that they don't pay VAT on commissions or rather 'Commissions include VAT where appropriate'.

But if your VAT registered then you'll still be paying it, so it just means they are undermining the value of their program.

think I'm gonna drop them - as it's not workth my while (i.e.17.5% less commission) and the potential for pi$$ing off the customs and excise is too high.

Anyone else got any ideas - the company is Quotline. Sure I can say that! Anyone else use Quoteline?

If they're VAT registered, which all UK companies with a turnover over about £56k have to be, then paying VAT on commissions wouldn't usually cost them anything as they just claim it back. If they have lots of accountants then it should be no problem.

Are they a UK company though? Maybe that's what the problem is? E.g. they may be based outside the EU for tax reasons.

If this is the case then they'd not be able to claim VAT back, but if they may also be outside the scope of VAT so you don't need to charge it. So it makes no difference to you.

E.g. I'll go back to the Commission Junction example we've covered before. They're a US company and so I don't need to charge them VAT as they're outside the scope of UK VAT. If they pay me £1000 then none of that goes to the VAT man.

If TradeDoubler owed me £1000, they'd add VAT on which I'd then pass on to the VAT man. The result is that for both networks I'd still have the same profit (£1000) but the difference is that one needs to be charged VAT and one doesn't.

Having said that, there are other possibilities. Some types of businesses (like gambling) are 'exempt' from VAT. That means they don't charge their customers VAT. The downside for them is that they can't claim the VAT back on their outgoings. So some gambling companies pay a set commission whether you're VAT registered or not as to pay your VAT is an extra cost to them as unlike other companies they can't claim it back.

So maybe this loan company is like that, as thinking about it I don't remember people charging VAT on loans so maybe they're exempt and so unable to claim the VAT back.

If that's the case then the payment they give you will include VAT, it'll just effectively be that they're paying you less. E.g. if you were paid £1000 when you weren't VAT registered it'd all be profit, but if you got the same amount when you were VAT registered it'd effectively be that they'd paid you £851.06 plus VAT.

So they're two reasons I can think of why they may not want to pay VAT. The first because they're not liable for it and you don't have to account for it, and the second because they're not legally allowed to claim it back and so don't want to pay the extra commission.

You'd need to find out what the real reason is as they way you account for VAT will be different. E.g. with the first way you'd not charge VAT and would keep the full amount as profit, and with the second you'd effectively have to reduce your profits and assume that your commission included VAT. You have to know which is the case as otherwise you could either be paying VAT when you don't need to or not paying it when you do!

The customs and excise website has a lot of info if you want to search it. They also answer questions by email, or you could phone them up as they're very helpful.

--- "We are a large company and have got a number of auditors and accountants, working within our company. We deal with a large number of Internet business"..

What point are they trying to make by this ?? Sounds like they're trying to big-themselves-up (as it were).

If they're paying you, VAT is in there somewhere, whether it's included in the amount you are paid, or added on afterwards.

Sound like ******s to me.

"If they're paying you, VAT is in there somewhere"

That's not always the case, as like I said Commission Junction pay me but there's no VAT in there and the VAT man doesn't expect any of it.

But in this case, looking at their web site, they're based in Manchester so what they pay you should include VAT, whether they agree to pay you 17.5% more to cover it or not.

cheers for the reply much appreciated!

They're based in manchester, certainly do over the threshold. But they're insurance brokers so they may not pay VAT on insurances but the do pay insurance premium tax. But the last point is relevant I as a vat regisitered business I charge VAT for my fees. I am not an insurance broker, nor am a trained IFA (he he walked out on Allied Dunbar as a trainee )

There sites are:

<a href="http://www.quotelinedirect.co.uk" target="top">www.quotelinedirect.co.uk</a> and <a href="http://www.wilsonsgroup.co.uk" target="top">www.wilsonsgroup.co.uk</a>

I'm in a process of removing their links.

Could someone steer me to the VAT on CJ commission mentioned in this thread?
I'm just doing my VAT return and previously have put CJ commission through without VAT but I'm having a panic attack now and think I ought to pay 17.5% on the lot.

Joe Connor
www.cantbarsed.com

Here are a few other threads on VAT:

pub105.ezboard.com/fukaff...=591.topic

pub105.ezboard.com/fukaff...=562.topic

pub105.ezboard.com/fukaff...=153.topic

pub105.ezboard.com/fukaff...2275.topic

Thanks wibble, clear as mud now :lol:
I'll put this one through as VAT exempt then at least I'm being consistent. FWIW I did mention this to the VAT man when I registered and he took away some copies of their payments for a closer look but never got back to me.
Looks likely it'll change given the new EU rules so let's wait and see what CJ do next.

Joe
www.cantBarsed.com