Comission Junction and VAT

I have recently taken the decision to become VAT registered on the basis that I don't deal direct with the public and it's costing me quite a bit of money for stuff I have to buy.

However, my accountant has raised a concern over income from CJ, as they are based overseas they don't pay VAT, but it is unclear whether the revenue here will decide that the comission is inclusive of VAT without evidence to the contrary and take 17.5% of my money off me.

I assume a number of you are in a similar situation so can you shed any light over it? I looked all over the CJ site but couldn't find anything at all about VAT.

Also... where can I get a copy of the CJ terms and conditions that I signed up to? They don't appear to be listed anywhere on the site either

Thanks for any help you can give me

-Ian
www.footballanorak.com

Hi popeckia, and welcome to the board!

There was a discussion a while ago about it that you ought to find useful, at:

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


As far as I understand it, payments from CJ are 'outside the scope of UK VAT'. I.e. you don't charge them VAT and won't lose any money by becoming VAT registered.

Hi Ian, welcome to the board.

This is the response I had from CJ in July regarding this:

Quote:

---

Because CJ are a U.S company, the service we provide is VAT exempt. The terms of business you contract under are with CJ inc and that is why Publisher payments and Advertiser invoices have to be administered through the U.S office. [/quote]

I also queried this with Customs and Excise, and they confirmed this to be correct.

One thing to watch, though, is that 'exempt' isn't (as I understand it) the right word in this case.

Some things in the UK are exempt from VAT. If you supply these things then you don't charge VAT and you are also not allowed to reclaim all the VAT on your business expenditure.

If you also supply non-exempt things (e.g. you earn money from UK networks) then you would be 'partially exempt' and there are rules about what you can claim back in the VAT you spend. E.g. you couldn't claim the VAT back for advertising something that is exempt from VAT.

What I've been told by Customs & Excise is that income from advertising provided to a US company (which is what we're effectively doing with CJ) is 'outside the scope of VAT' and not exempt. These are different things.

Being 'outside the scope of VAT' means you can happily reclaim the VAT on your own business expenditure, but had they been 'exempt' and so making your business earnings 'partially-exempt' (assuming you have other income that's not exempt) then you'd be into complicated rules about VAT.

Hope that makes sense!

Thanks very much to all the helpful replies and links to the other thread. They help clarify the sitatuon a great deal... just wish CJ would put this information somewhere useful on their website!

Thanks again

As an Aside,

Just had a look at your site Ian and it looks excellent,
A small thing I did notice was that your Wiliam Hill link at the bottom is not an affiliate link.

If your not aware, William Hill have a scheme here.

www.dgm2.com

Thanks for the comments, always nice to hear!

As for William Hill... I did register with DGM2 at some point in the past and then lost the login details, despite numerous attempts to contact customer services to get them to either provide or reset details I am still unable to access it! I guess I will create another account.

On a more general note, and I hope this isn't drifting too far off topic, given the nature of this board, my site is quite new, and although I am getting traffic into it, it's quite clear that I need a great deal more.

From the sounds of things, many sites mentioned on this board are getting dozens of comissions a day, whereas I am getting nowhere near one a day Obviously time will allow the site to gain more viewers, but one major problem I appear to have is that it's a gambling stats site (great for high value referrals to bookies) but most people view during the day from work and can't access bookmaker sites.

Do you think it's worth pushing different non-gambling affiliates during working hours and leave bookmakers until the evenings when people are more likely to be browsing from home?

I've noticed the CJ do user level tracking through a SID value, is it within the rules to use this to try and set a site up so that someone HAS to visit an affiliate and generate a comission before they will be granted access to a site?

Strikes me as a nice way to generate income without directly chasing the users for money but in asking them to do something effectively cost-free, like apply for a credit card. I wasn't sure though how the credit card companies would feel about this, would they care?

This way, I can make the site effectively subscription, but instead of paying money you have to give your time and details to one of a range of afffiliates in exchange for access to the site.

Is this making sense?

Incetivised clicks are worth far less to merchants than genuinely interested punters. CJ requires you to declare if you are incentivising clicks and you may be refused from programs, offered lower commissions, or be allowed normal terms.

I think that some on here are incentivising clicks with some success - I dont know if they have declared it though

NetFlip do it with CJ and make a complete fortune for themselves and for CJ also they get far from the lowest rates, in fact they get many special rates and deals we little people will never see.