Noob VAT Question

[Winston]

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Hi,

I'm non-VAT registered and setting up a new adwords account to run some campaigns to be billed to my UK credit card and UK address in US dollars.

Is VAT essentially something I don't need to worry about until I hit the threshold? I'm nowhere near that YET

Will google charged me VAT on my new account? Any particular account settings I need to check to prevent unnecessary charges given my circumstances?

Thanks very much!

[MattSweet]

I think you have to pay the VAT - at 21% Irish rate too.

The reason being that you have to tick business use to stop the VAT charges - although you can only tick that if you have a VAT number... Unless it has changed since I was in your position, anyone?

Once you register for VAT in the future, you can get them to change it over and you'll get your whole account history of VAT refunded, not just the VAT accrued since you VAT registered. Hope this makes sense.

[Winston]

I think you have to pay the VAT - at 21% Irish rate too.

Thanks for replying Matt. I've read various conflicting reports on this, some suggesting as you do that you will get charged, some saying as a non-VAT registered you won't get charged.

What's the definitive answer I wonder?

[buspassjohn]

Thanks for replying Matt. I've read various conflicting reports on this, some suggesting as you do that you will get charged, some saying as a non-VAT registered you won't get charged.

What's the definitive answer I wonder?

If you have a valid VAT registration, Google can charge you without VAT and pass the liability for the VAT on to you at your own countries VAT rate under the carousel rules.The effect is that you offset the VAT against your output tax as a business expense (that's the simple result).
if you are not registered for VAT then Google has to charge you at their domestic rate and you're stuck with it and cannot claim it back until you register, the effect is another 21% on your adwords cost.

[MattSweet]

It may be worth VAT registering if you are planning on doing some decent volume through adwords as saving 21% on costs is worth the hassle of VAT returns every 3 months... just about!

If your turnover is under the threshold, you will have to justify it, but I assume that would be easy - VAT registering would save you 21% on costs and even HMRC is reasonable...

[Winston]

Thanks Matt & John, makes sense.

Looking at the adwords help, Google says you need to specify yourself as a business in your account in order for them not to charge the VAT.

Do they actually require you provide a valid VAT number for them to stop charging the 21%?

I'm likely going to VAT register now, which from speaking to HMRC is taking about two weeks if you submit online. Once registered, I believe you can retrospectively claim the 21% back from Google?

Also, am I right in thinking the flat rate VAT scheme would be no use here because you can't take into account any 'purchases', such as adwords expenditure?

[lucie29]

I've been wondering the same thing... I'm registered as a sole trader but not VAT registered. I ticked the box to say I'm a business in google but didn't enter a VAT number. Even without a VAT number Google hasn't been charging me any VAT.

I'm under the threshold for needing to register but just wondering if I'm actually supposed to be paying Google VAT... or if I need to register for VAT...

Any help would be appreciated