VAT on the major PPC engines

[Wardy]

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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.

Befuddle I also received an email today from google saying abotu a VAT refund. However I don't think I shall be gettingone. Have a look at your invoices from Google, what is showing in the VAT part of them? Mine show as £0.00.

I spoke to someone at Google Ireland this morning and also my accountant and they didn't think I would be getting any re-fund either.

Cheers
Wardy

[befuddle]

Have a look at your invoices from Google, what is showing in the VAT part of them? Mine show as £0.00

Mine show individual amounts such as £81.79 which was the first 'VAT assessed' amount in June 2003.

[lethal0r]

so if you spend £48k on adwords and receive £16k from VATable sales then you have to register? im very close to this so just want to double check.

tom

[befuddle]

so if you spend £48k on adwords and receive £16k from VATable sales then you have to register? im very close to this so just want to double check.

Now I'm even more confused. So are people saying that if you SPEND £32,000 promoting shops on Google and you only break even, you have to be VAT registered?

ie 32,000 spent + 32,000 received = 64,000

Surely not!?

[Frostie]

Just received an email from Google about the VAT refund. This relates to them charging me, and everyone else, at Irelands level (21%).

Emailed reads;

AdWords Account Number: nnnnnnnn

Thank you for updating your VAT information with Google AdWords. We have reviewed your account, and determined that you are eligible for a refund of past VAT charged by Google Ireland in the amount of USD xx,xxx.xx

Over the next few weeks, Google will issue a cheque for the amount to be refunded, and a credit note for your tax records. We will mail the cheque and credit note to your business address.

I suspect that this is the full 21% refunded, and from this, UK VAT man will be wanting 17.5% of it?

How confusing is all of this?

[Wardy]

I too have received an email with a refund amount. I was sure I wasn't due one. Going to be a pain in the arse though I reckon if it's correct as it's going to cost a wedge for the accountant to sort all the affected paperwork at a guess?

Cheers
Wardy

[lethal0r]

now im very confused. I just rung up the VAT helpline about reverse charge VAT and the lady on the phone said this.

"as its a supply you've received and not one you have made it does not count towards your VAT threshold. reverse charge is just a method of accounting and is irrelevant."

keith do you have anything to say on this? or anyone else? to help my poor brain :s

[befuddle]

hic I'm in the bar and spending my hefty refund as I type hic

[Barry]

Both myself and my accountant had so many conflicting stories and explanations about this that I did exactly the same. Just went on a bender with it all.

Great

[Wardy]

Does anyone have any extra information on this as the best thing to do? Want to go to my accountant with as much information as possible about it?

Google are no help!

Cheers
Wardy

[hrbs]

Does anyone have any extra information on this as the best thing to do? Want to go to my accountant with as much information as possible about it?

Hi all

Good to hear that you are having some refunds.

VAT threshold and Adwords ... I have written an article on this at tips.hrbs.biz (VAT on Adwords Expenditure) which explains why you need to add Adwords spend onto your turnover for VAT registration purposes.

Accounting for the refund ... this is quite straightforward as you previously claimed the Irish VAT inclusive figures as a deduction in your accounts. The credit note and subsequent refund of the Irish VAT should be treated as an advertising credit note ie reducing your current year advertising costs (assuming you show Adwords as advertising in your accounts). The refund will therefore increase your profits and be taxable. UK VAT is not relevant - only income tax (or corporation tax if you are a limited company).

The complexity comes where you have changed business type ie gone from sole trader to limited company during the period to which the refund/credit note relates . The treatment depends upon to whom the credit note and refund is made. If anyone needs any guidance on this either PM or contact me via the form at tips.hrbs.biz (Contact HRBS | Business tips from High Royd Business Services Limited ).

Regards

Keith
Fixed Fee Accountants and Small Business Specialists - High Royd Business Services Limited

[Barry]

Thanks Keith thats the plainest way I have had it explained to me. Its all beginning to make sense finally.

Ta

[hrbs]

now im very confused. I just rung up the VAT helpline about reverse charge VAT and the lady on the phone said this.

"as its a supply you've received and not one you have made it does not count towards your VAT threshold. reverse charge is just a method of accounting and is irrelevant."

keith do you have anything to say on this? or anyone else? to help my poor brain :s

Hi

The rules in respect of Google Adwords are :

Extract from my article at tips.hrbs.biz (VAT on Adwords Expenditure )

VAT notice 700 deals with this and the relevant sections are quoted below …

“5.4 Services received from outside the UK
If you receive from outside the UK for business purposes, any of the services listed in Section 31 [* Section 31 includes advertising services ie Adwords *], the services are treated as if you supply them, and you must account for output tax on them.

If you receive from outside the UK any of the services listed in Section 31, their value counts towards your taxable turnover. This applies even if the only supplies you make in the UK are exempt.”

Hope this helps

Regards

Keith
Fixed Fee Accountants and Small Business Specialists - High Royd Business Services Limited

[bapages]

What puzzles me is Google charge 21% Ireland rate but DELL charge 17.5% UK rate even though they are based in Ireland.

[pride]

What puzzles me is Google charge 21% Ireland rate but DELL charge 17.5% UK rate even though they are based in Ireland.

I think that it's because Dell are physically providing their services in the UK whereas Google are based in Ireland and Cyberspace.