VAT on the major PPC engines

[KirstyM]

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You do not pay VAT on Adwords. As has been said many times before on the forum, you are both the provider and recipient of this service so in effect it cancells itself out (no, I don't get it either).

You do then have to take your adwords expenditure into account when working out when to apply for VAT registration. You add the adwords spend to your turnover for the tax year.

[Top banana]

This is a great thread, very interesting guys, thank!

If i claim the vat back from google, do i not have to charge vat on my commissions from the affiliate networks? If yes, is it too late claim VAT for payments they have already made to me (i'm been earning since Aug 2006)? If it is too late, would i not then lose out by claiming the vat back from google becuase i would then to pay vat on the commission from my own pocket?

[zaq]

You do not pay VAT on Adwords. As has been said many times before on the forum, you are both the provider and recipient of this service so in effect it cancells itself out (no, I don't get it either).

You do then have to take your adwords expenditure into account when working out when to apply for VAT registration. You add the adwords spend to your turnover for the tax year.

But if you are already VAT number and google sends me a chq for $1,000,000 for backdated VAT i can keep it all?

[zaq]

Off google adwords
=================================
Advertisers with EU (Non-Irish) Business Addresses

If you qualify to self-assess your VAT charges, you may register for a VAT number and pay VAT at your member state rate. You can enter your VAT information in your Billing Preferences page (under your My Account tab) at any time.

After you update your information, we will not charge you VAT. In addition, you will be responsible for assessing your own VAT charges at your EU member country rate.

https://adwords.google.co.uk/support...=6397&topic=47

So you have to add 17.5% to your google adwords and then sent the amount to the taxman

[KirstyM]

No, you don't pay any VAT! That clause in Google is a cover-all to deal with many countries with varying rules and rates on sales tax.

I know what UK law is because I'm VAT registered and have been for 12 months. I do not pay any VAT on adwords and have this confirmed in writing from the Inland Revenue and My Accountant. If you get an adwords refund, it's yours to keep (although I got taxed on mine, which seemed a bit harsh).

[KirstyM]

This is a great thread, very interesting guys, thank!

If i claim the vat back from google, do i not have to charge vat on my commissions from the affiliate networks? If yes, is it too late claim VAT for payments they have already made to me (i'm been earning since Aug 2006)? If it is too late, would i not then lose out by claiming the vat back from google becuase i would then to pay vat on the commission from my own pocket?

You don't charge VAT unless you are VAT registered. This Google refund is an interesting little variable of the tax laws in the UK. As I said above it's effectively VAT free because you are both the seller and recipient of the service. Therefore, the VAT cancells itself out.

[zaq]

Thanks KirstyM

[hrbs]

Hi

The google VAT refund will be taxable because you included it in your original (VAT inclusive) google costs when you completed your accounts/tax return. If you had not been charged the VAT your costs would have been lower and therefore your original taxable profit higher. It is merely a timing difference, to your benefit.

Regards

Keith
High Royd Business Services Limited
Small Business Specialists

hrbsonline.com - online accounting solutions

[Travel Pixel]

Can anyone tell me why the same rules do not apply for yahoo search marketing? They charge VAT and there is no option (that im aware of) to not charge VAT.

I think VAT doesnt apply to msn adcenter because they are based in the US - anyone know better?

Dave

[Top banana]

A quick update.

A few days ago i got a cheque for £7,544 from google and all it took was a shortly email.

You can read more about it here: Google Adwords Give me a £7,544 Tax Rebate

[befuddle]

Hi, since 2003 I've spent over £100,000 on Google Adwords. In March 2007 I became a ltd company and I updated my Google account to say it is now being used for 'business purposes'. I am not VAT registered as my turnover for each year has been below the threshold.

Today I received an email from Google saying I may be due a VAT refund in the coming months. I've paid £18k to them in VAT.

So what now? If they refund the whole amount to me does all that money belong to my business or do I have to pass it on to the VAT man?

It's possible that if they do refund the full £18k that I may go over the threshold, as I've had a strong six months. So there's two scenarios there.

I've sent Google's email to my accountant and we'll be chatting about it in 3 weeks time. If there's any advice prior to then I'd appreciate it.

Cheers,
Ray

[zaq]

Hi, since 2003 I've spent over £100,000 on Google Adwords. In March 2007 I became a ltd company and I updated my Google account to say it is now being used for 'business purposes'. I am not VAT registered as my turnover for each year has been below the threshold.

Today I received an email from Google saying I may be due a VAT refund in the coming months. I've paid £18k to them in VAT.

So what now? If they refund the whole amount to me does all that money belong to my business or do I have to pass it on to the VAT man?

It's possible that if they do refund the full £18k that I may go over the threshold, as I've had a strong six months. So there's two scenarios there.

I've sent Google's email to my accountant and we'll be chatting about it in 3 weeks time. If there's any advice prior to then I'd appreciate it.

Cheers,
Ray

Read the above past posts and you have your answer.

[befuddle]

So, in summary, assuming I stay below the threshold, I don't pay VAT on it but it is taxable as income.

I've got the feeling that if they pay me the full £18k anytime in the next 3 months this will push me over the £64K threshold. Need to check my books tonight.

[Frostie]

Ray

From what I read of the email, we have been charged VAT at 21% which is the Irish rate. Because we are in the UK, we should have been charged 17.5% so my brain cells (all 3 of them) told me I would be getting a rebate of 3.5% which is the difference on what I have paid, and what I should have been paying.

All my Google bits and bobs are US$ so I'm not sure how this will work with currency exchange rates etc.

I hate money, figures and accounts

[befuddle]

so my brain cells (all 3 of them) told me I would be getting a rebate of 3.5% which is the difference on what I have paid, and what I should have been paying.

Hmm, I don't think that is the case but then I wouldn't have posted here if I knew

The email does say, "You are now responsible for self-assessing VAT at your country's local rate."

So, I think they're going to give us the full whack back but we are expected then to 'self-assess VAT' !?

Oh I need a holiday