VAT registration question

[danster]

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Hi all,

I registered for VAT in 2008, very late as I wasn't aware I needed to. I claimed the VAT from but recently was advised from my partner that I should have claimed for a date prior to what's specified on the registration certificate.

For example; I registered in 2009 and had to claim as far back as 2008 but now realised I passed the threshold much sooner so I need to claim back as far as 2006!

What should I do? Would I need to contact the networks (i.e. TradeDoubler, Affiliate Future etc), and explain? Or should I contact HMRC?

Would HMRC apply a penalty? Or would they simply re-issue a new registration certificate? Should I apply for a new one for that new period?

Many thanks in advance
Dan

[darrenb]

In previous years the VAT threshold was: 2006/07 – £61,000; 2007/08 – £64,000; 2008/09 - £67,000; 2009/10 - £68,000; 2010/11 - £70,000.

If I have understood you correctly then you notified HMRC during 2009 that your business passed the VAT threshold sometime in 2008. You have since realised that the threshold was reached during 2006.

More information on late registration and penalties etc. here: HM Revenue & Customs: Late VAT registrations

You need to look at your business turnover on a rolling 12 month basis to identify when you surpassed the threshold for that particular year.

If that was indeed 2006 then HMRC will look to register you for VAT from that date and recover any VAT due.

There are a couple of additional things to consider when calculating the VAT threshold:

1. Do you pay for Google Adwords? Due to the VAT reverse charge rules any expenditure for Adwords should be added onto your sales turnover when calculating the VAT threshold. This is because, for VAT purposes, advertising from non UK companies is accounted for by the user of the services on their UK VAT return.

2. Do you receive commission from Amazon, Ebay, CJ? Networks outside the UK would not be included in the turnover threshold calculation as they are outside the scope of UK VAT.

More information on calculating threshold level: http://www.hmrc.gov.uk/vat/start/reg...o-register.htm

If you have not done so already I would speak to an accountant about the issue as they will help mitigate any penalties and/or interest that may arise and also confirm your position is correct.

Hope that helps.

Darren

[Hero]

If you have not done so already I would speak to an accountant about the issue as they will help mitigate any penalties and/or interest that may arise and also confirm your position is correct.

This is key advice - an accountant is extremely important for affiliates as they can save you from nasty surprises and guide you on what you need off merchants & networks