Adwords VAT refund

[HarveyC]

Just received an email from Google...

We recently reviewed your AdWords account to make sure that its VAT setting is correct. It was indicated previously either that your account was intended for non-business purposes or you have not entered a VAT ID. We therefore have assessed VAT at the Irish standard rate (currently 21%) and added this amount to your AdWords charges. During our review, we determined that your VAT setting was incorrect. Your AdWords account is, in fact, used for business purposes. This means that it is used to gain an economic advantage by promoting goods or services on Google AdWords. Note that the vast majority of advertisers use AdWords for business purposes, including corporates, affiliates, sole traders, self-employed merchants, partnerships, etc. As a result of this discovery we have switched your VAT setting and will no longer add Irish VAT to your AdWords charges. You are now responsible for self-assessing VAT at your country's local rate (Ref: article 194 of Council Directive 2006/112/EC).

Without sounding like a complete numpty, when I get the cheque, am I meant to be giving it to the government?...

[ian-d]

Give forum member 'hrbs' a shout, he knows this subject inside out!

[HarveyC]

Cheers Ian, to me it's numbers and figures, pulling the puzzles apaaart...

[ep90]

Originally Posted by HarveyC Just received an email from Google... Without sounding like a complete numpty, when I get the cheque, am I meant to be giving it to the government?...

Going forward, all this means is there is no VAT for you to claim back (from the government) in your quarterly VAT returns. That's because they are not charging you VAT.

Looking back, ask Google for a refund on all the extra VAT you paid them when they were charging you 21% extra. That's what I did. When you get this cheque the money is yours to keep.

[ian]

Originally Posted by ep90 Going forward, all this means is there is no VAT for you to claim back (from the government) in your quarterly VAT returns. That's because they are not charging you VAT.

They are charging you VAT, but it comes out in the wash when you do the return. You 'owe' 17.5% VAT on your adwords spend, and then claim it back on the same form. I think it's box 2 where you put "VAT due but not paid" on your VAT return. Check with an accountant though. HRBS will no doubt put this issue to bed.

[Brigadoon]

Are you actually registered for VAT and have a valid VAT number?

[hrbs]

Originally Posted by ep90 Going forward, all this means is there is no VAT for you to claim back (from the government) in your quarterly VAT returns. That's because they are not charging you VAT. Looking back, ask Google for a refund on all the extra VAT you paid them when they were charging you 21% extra. That's what I did. When you get this cheque the money is yours to keep, it's not a taxable income either as it's a refund.

Hi

For a guide on how to reclaim the Adwords Irish VAT go to:
How to reclaim VAT on Google Adwords - - Business and accounting tips from HRBS Accountants .

The refund is taxable as it is a part refund of advertising costs you have already claimed as an expense in your accounts and is therefore a reduction in your advertising costs. It may be that your accounts will then have negative advertising costs as the Adwords refund may exceed your other advertising costs. You will need to explain this to your accountant (if you use one ... why they didn't advise you on Adwords and VAT?).

For a guide on how to treat Adwords in your VAT return, I have written an article at:
Adwords And Your VAT Return - Business and accounting tips from HRBS Accountants .

Don't forget that because of EC VAT rules, Adwords costs count towards your taxable supplies for VAT registration purposes ( see VAT for affiliate marketeers - Business and accounting tips from HRBS Accountants for an explanation).

Hope this helps.

Regards

Keith
Fixed Fee Accountants and Tax, VAT, Payroll Specialists providing proactive, professional service to small businesses - HRBSaccountants.com

[ep90]

Originally Posted by hrbs Hi ep90: You cannot reclaim Irish VAT in your UK VAT return. If you have done so then you should recheck your VAT returns as HMCE will pick this up when they visit you and will charge interest and potentially penalties

I have not claimed Irish vat back or even suggested it?

Going forward, all this means is there is no VAT for you to claim back (from the government) in your quarterly VAT returns.