Quote:
Originally Posted by hirschnathan
If you turn over over £57k you have to register for vat, you can reclaim your vat but then you have to pay vat on your commissions. As far as I know each ltd company has a seperate threshold.
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Hi,
Threshold is now £64k, but includes VATable sales and Adwords expenditure.
ie if sales are £50k & Adwords expenditure £14K you have to register for VAT. The threshold is for the preceeding 12 months or if you expect to exceed the threshold in the next 30 days sales/Adwords you will need to register. (ie £64k in the next month alone).
Adsense (and similar non UK) income is excluded from the calculation as it is out of the scope of UK VAT - but is still taxable (income or corporation tax if you are a Ltd Co.)
UK commissions - if you are VAT registered you will charge VAT, receive it from the networks and at the end of each quarter pay it to HMRC ie you will be no worse off. You can reclaim the input VAT on costs such as UK hosting, PC, software, broadband, mobile phone etc. VAT can only be reclaimed where the invoice/bill has a valid VAT number, costs such as postage (not courier services such as UPS) are exempt for VAT purposes.
If your turnover is below the VAT threshold but you have high input VAT (not usually the case for
AM unless lots of UK expenditure and non-UK sourced income which is out of scope of UK VAT), you can voluntarily register for VAT and recover the input VAT.
As usual there are HMRC penalties for not registering at the correct time. Also it is illegal (ie fraudulent) to charge VAT if you are not VAT registered.
Hope this helps clarify a few points.
Keith
HRBS Limited
Small Business Specialists
hrbsonline.com - the online accounting solution