Good Adwords VAT Refund??

[harris1]

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I have had two cheques from Google over the last couple of weeks. One was quite small the other was enourmous. I have three google advertising accounts, I am presumming at some point I will receive a third cheque.

I am VAT registered but Google trade out of Ireland, so under EU free trade laws, if vat registered in the UK, there is no vat on on Google advertising.

Basically having spoken to my accountant we have come to the conclusion that Google have charged VAT when they shouldnt have.

Its not due the vat man it goes back into the business shown as a credit (Overcharge) on advertising services by Google.

Straight on the bottom line and will be taxed as profit. Nice though even if we only see half of it after income tax.

THIS IS MY TAKE ON THE SITUATION. IT IS NOT ADVICE OR A RECOMMENDATION.


On a side note has anyone actually had the funds cleared ? My bank has told me it will take up till 18 days for the cheque to clear. I am waiting to see if the small cheque clears without problems before trying the big one.

[sticky]

yes i believe mine has now cleared (paid in on the 9th Jan)

[Barry]

Hi harris1,

that is exactly my take on the situation as well, just put it straight back into my business account and marked it as an overcharge.

BTW in my tsb account it only took 4 days to clear so it doesn't take as long as your bank might have stated.

[baldie]

Harris1, that sounds a reasonable explanation though I'm still unsure as to why I've received a refund up to 01/01/2004 when I became VAT registered in may 2005 though.

[retrolink]

Below is the long, but useful, response I got from Google Adwords last month on the issue of VAT refunds. Essentially it seems like you bank the cheque and self-assess at 17.5% VAT instead of the Irish 21% - don't take my word for it though, use a professional!

From Google Adwords:

Google Ireland Limited recently received clarification from the Irish
Revenue Commissioners regarding the self-assessment of VAT by EU AdWords
advertisers. All VAT billing for EU advertisers is subject to Irish VAT
law, as Google's European Headquarters are based in Ireland. However,
qualifying advertisers may now self-assess VAT at their EU Member State's
applicable rate, and file for a refund of past VAT charged by Google
Ireland Ltd. (all refunds will be issued by Google Ireland Ltd., and not
the Irish tax authorities). To be eligible to self-assess VAT at your
Member State's local rate, the following statements must both be true:

1. Your business address is within the EU, but outside Ireland.
2. You advertise with AdWords for business purposes.

WHAT HAS CHANGED

EU VAT legislation states that unless you are using AdWords for business
purposes we must charge you VAT at the rate of the country in which we are
established (Ireland). Previously, we have required that advertisers
supply a valid VAT number in order to self-assess VAT at their EU Member
State's applicable rate.

As of June 1, 2005, advertisers may declare they use AdWords for business
purposes, and self-assess VAT due on AdWords services. Where possible you
should supply a valid VAT number, however this is not obligatory in order
to self-assess VAT due on AdWords services.

If you are there using AdWords for business purposes, and your business
address is located in the EU (but outside Ireland), Google has no longer
applied Irish VAT to your account. You should now self-assess to ensure
that you pay VAT at the local rate of the member state in which your
business address is located. As the information in your account indicated
that you were eligible for a VAT refund, you have been issued this refund.
I will explain further below how you can access all invoices going back to
when your account was established with us. Where there has been VAT
applied in the past, you will find this clearly marked on the printable
invoices which you can download from within your account.

Please note that Google AdWords cannot provide advertisers with VAT
advice. For general information about VAT rates, self-assessing VAT, or
receiving services for a business purpose, please consult your local tax
office.

If you would like to obtain invoices or receipts for charges to your
AdWords account, it is possible to print both an invoice and a receipt for
charges to your AdWords account at any time. This printable invoice
contains our full VAT and contact information which you may require for
your bookkeeping records. You will also find information on this invoice
regarding the relevant EU tax and VAT directives.

To print an invoice, please follow the steps below:

1. Log in to your account at: http://adwords.google.co.uk
2. Click the 'My Account' tab to load your billing summary. (If you would
like to view the billing summary for a specific date range, please select
the appropriate months and years from the drop-down menu at the top of the
page once your billing summary has loaded.)
3. Click the invoice number for any line item reflecting a charge to your
account.
4. Click 'Printable invoice' above the 'Invoice Details' box. This will
open your invoice in a new window.
5. From your browser menu, select 'File' then 'Print'.
6. From the printer prompt, click 'Print'.

For more information regarding how VAT affects your AdWords account please
visit:
https://adwords.google.co.uk/support...=6397&topic=47.

[sticky]

This is all rather confusing!

Surely this should be a refund as its VAT that we didnt need to pay in the first place or if we did pay it then you could have claimed it back on your VAT return.

Reading different forums there is mixed views , some say it a refund and others say you have to pay the UK 17.5% VAT part of it back

[bazza1603]

Hi,

I spend the lot on dirty cars and fast women....

Am I right in thinking

If I am not VAT registered. I pay the 17.5 percent of my Google invoices since Jan 04 and now to Aunt Liz? I also have to pay Liz 17.5 percent of all future Adword spends

If I am VAT registered. I keep the lot but pay tax as normal.

If I have registered between Jan 04 and now I apply a mixture of the above?

Best regards

Baz

[km8]

Hi,

I spend the lot on dirty cars and fast women....

Am I right in thinking

If I am not VAT registered. I pay the 17.5 percent of my Google invoices since Jan 04 and now to Aunt Liz? I also have to pay Liz 17.5 percent of all future Adword spends

If I am VAT registered. I keep the lot but pay tax as normal.

If I have registered between Jan 04 and now I apply a mixture of the above?

Best regards

Baz

Correct, if you live in the UK.

[bazza1603]

Hi,

This is my reply from my accountant saying I just pay the income tax on it.

"if you're not vat registered you can't pay vat to the tax man - what're you meant to do? write them a cheque & a pretty letter? you can't fill in a vat return if you don't have a vat number. it doesn't make any sense"

What a complete and utter loads of ballcocks. My accountant gets diffrerent answers everytime they ring

Regards

Baz

[Bod]

What i have been told for non Vat Registered companies/self employed in the uk getting a vat refund from google is.

If you get a refund from google you will need to self assess for VAT so if you go over the VAT threshold at anytime in a 12 month period and this is from any given month to 12 months on you have to register for VAT, even if your commissions sales do not meet that threshold, its because the spend on google is taken into account for this.


so bazza no you cant pay it to the tax man and add your spend to your income and self assess vat

Will confirm this tomorrow when i ring the legal team about it

[bazza1603]

Hi,

So in simply teams I will pay tax on the money refund from Google at 22 Percent?

I just cannot get my head around it.....

Thank you

Baz

[Bod]

I would have thought that be the case but i know id rather pay 22% of that figure we got back than not have a cheque at all.

[mibut]

Thanks to this post I filled in details for a Vat refund.
Had an email from google today saying to expect cheque in the next week or two.
Without the forum and this post I wouldnt have known about this, so ta very much

[moneyfornothing]

Does everyone receive an email after changing their Adwords purpose to 'Business use' to confirm a refund will be sent? I did so nearly a week ago and haven't heard anything since, just wondering if that's standard.

[christh]

I have two accounts with AdWords; I've received a refund for the newer account on Dec 19, but had nothing re my first account (where I've spent stacks of cash with them and would actually get a cheque of value worth legging it down hsbc for ). They did manage to write the cheque out to my company name though, to their credit.

I've just sent them a reminder email, I'll keep you guys posted.