Reclaiming Google Ireland VAT

[timbonner]

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Hi

Sorry if this is a silly question, but I cannot get my head around the Adwords VAT situation.

I am not VAT registered and don't intend to at this stage. Google, however, are no longer charging me VAT as I updated my account to say I am using Adwords for business purposes.

From a previous post, I get the impression I should add the Google Invoice totals to my income (I assume as well to my outgoings? which would cancel these out effectively?!?). Is that correct?

Would it be easier for non-VAT registered people like myself to just pay the 21% VAT to Ireland?

Any help would be appreciated.

Thanks

Tim

[charlton]

It might be worth registering for VAT, that way you can get paid VAT on your affiliate income and claim back any VAT on expenses. There is also a Flat Rate Scheme which you can apply for once registered where you effectively only have to pay 9% VAT on the invoices where you have been paid 17.5% (assuming you are accepted on to the scheme).

With Adsense income, this is non vatable so you show it as 0 vat on your accounts.

As always, ask a good accountant who understands Affiliate Marketing (PM me if you need one recommended to you).

[Bod]

Ok, what i have learned today.

You use for Google adwords for business, you can ask google to refund and stop charging you 21% vat.

Now as long as your commissions and the amount you spend on PPC through google are less than £60,000 you keep the money you would have paid to google, you do not have to pay the 17.5% on it but only if your not VAT registered. If your figure is more than you have to register for VAT, so you need to work out if your going to be better off.

I have rang the Tax office and they have confirmed what im saying.



http://customs.hmrc.gov.uk/channelsP...HMCE_CL_000346

Sections 11 and 15 have info regarding this.

[timbonner]

Thanks for that. That clarifies most of my concerns. I am fairly new to affiliate marketing and am nowhere near the VAT registration threshold as yet so it sounds as if I can keep hold of the VAT refund due from Google.

But for the future, can I just clarify with you that I would have to register for VAT if my commissions received PLUS my actual payments to Google (excluding VAT) are ever over £60,000?

Say for example my commission received is £20,000 and my payments to Google (excluding VAT) are £15,000, the total of £35,000 is under £60,000 and therefore I wouldn't have to register, but if my commission received is £40,000 and my total payments to Google are £25,000, the total being £65,000, I would have to register for VAT. I assume I can deduct any other taxable expenses from this total? So if in the last example, my taxable expenses were hypothetically £6,000, the total would be £40,000 + £25,000 - £6,000 = £59,000 and therefore no registration required.

Once you are VAT registered, under self assessment, I guess you would just take account of 17.5% of any Google invoices you pay (which exclude VAT) and would need to pay this amount on to HM Revenue & Customs as VAT?

Thanks again.

Tim

[Bod]

Im no VAT expert, so please ask the tax office to comfirm.

You would be correct on the google spend ( as they would class this as a income as your not paying Vat) and your commission income.

I havent a clue about how it would work after reaching that threshold, all i know is on reaching that threshold, you have to be VAT registered.

[timbonner]

Many thanks Bod.

I will clarify things further with HM Revenue & Customs.

Cheers

Tim

[bazza1603]

Hi,

My accountant dug into this when Google first announced self accessment.

"if you self assessed your VAT you wouldn't have to pay VAT at all gave the reason for this as 'you will be treated as both the supplier and recipient of the service'. The Inland Revenue have confirmed that this means you would have to take the value of the google bills and add them onto your turnover for the year"

Hope this helps

Best regards

Barry

[timbonner]

Hi Barry

Thanks for your reply.

I understand from this I would need to add the google bills onto my commission, as well as treating them as payments if I am not registered for VAT, so effectively I would pay income tax on them anyway via self assessment.

E.g if commission is £1,000, google bills are £1,000, business expenses are £200

Resulting amount subject to tax would be:

Receipts
Commission £1,000
Google Bills £1,000
------
£2,000

Payments
Google Bills £1,000
Expenses £200
-------
£1,200

Resulting in £800 being subject to income tax (and possibly NI).

I assume that is what your accountant meant? Sorry, it's just easier for me to understand if I use an actual example.

Thanks

Tim

[bazza1603]

Hi,

I dont want to say its right or wrong as I am not sure. I know at the end of she said for me not to register or self assess for VAT.

Best Regards

Barry