VAT Registration Form - Bit Of Help Please?

[KirstyM]

Hiya,

The good news is that I've been doing quite well out of AM recently!

The bad news is that this months payments will send me over the VAT threshold.

So I have a form to fill out, and I'm a tad confused!!

Can someone clarify the question that says "Please estimate the value of taxable supplies you expect to make in the next 12 months".

Are they just asking how much money you think you'll get in that's eligible for VAT?

I note the form is not Crystal Mark approved *wail*

[scifind]

All I can suggest is that you speak to an accountant if you don't already have one.
Just a quick plug for my brother: http://www.rjeaccounts.co.uk/ he specialises in small business acounting

[hrbs]

Kirsty

>> Can someone clarify the question that says "Please estimate the value of taxable supplies you expect to make in the next 12 months".

Yes this is the amount of commissions and other sales that you expect to make over the next 12 months that you would charge VAT on. I would suggest you just use 12 x the last month's figures as a basis unless the commissions are seasonally based.

HMRC link is http://customs.hmrc.gov.uk/channelsP...0086#P99_10425

If you think your commissions have peaked and will not be above the threshold for the next 12 months, you do not need to register, but you would need to inform them (see section 2.2 of the above link).

I would suggest applying for the flat rate scheme which greatly simplifies your VAT returns (VAT payable to HMCE = flate rate percentage x sales invoiced including VAT). There is a 1% discount for the first year.

HMCE link:
http://customs.hmrc.gov.uk/channelsP...yType=document

Registering your business type as "business services not listed elsewhere" would give a flate rate of 11% minus 1st year discount ie 10%.
Assuming no input tax, sales of £62k + VAT would give a VAT liability to HMCE of £7,285 whereas the VAT charged to your customers would be £10,850 ie extra profit of £3,565 year 1, £2,836.50 year 2 .

You may be able to agree a different business type with HMCE with a potentially lower flate rate (the application form needs a description of your business for HMCE to agree the rate).

The flat rate ready reckoner is here:

http://212.100.226.149/hmc/index.jsp

the trade sectors are listed here :

http://212.100.226.149/hmc/HMC?cmd=s...rnd=1626845922

(Data processing is 13% and based on £62k sales gives potential savings of £2,108 year 1, £1,379.50 year 2)

The VAT return is also very easy to complete!

I am an Accountant so if you need any help PM me.

Regards

Keith
www.hrbs.biz

Originally Posted by KirstyM Hiya, The good news is that I've been doing quite well out of AM recently! The bad news is that this months payments will send me over the VAT threshold. So I have a form to fill out, and I'm a tad confused!! Can someone clarify the question that says "Please estimate the value of taxable supplies you expect to make in the next 12 months". Are they just asking how much money you think you'll get in that's eligible for VAT? I note the form is not Crystal Mark approved *wail*

[KirstyM]

Wow Keith, I didn't expect to score some "proper" accountancy advice!

Thanks so much, If you're going be around this forum often I bet you'll be a popular chappie.

[hrbs]

Kirsty

As I posted elsewhere [ http://www.a4uforum.co.uk/showthread.php?t=43996&page=2 ], AdSense income is "out of scope of UK VAT" so do not include in your turnover calculation for VAT purposes.

Keith

[essdeekay]

Hi Kirsty - will email you on Tuesday - it's a looooonggggg story!

Do you have to register for VAT on affiliate commissions if you hit the threshold?

The reason I ask is that in my financial services business we are NOT VAT registered as commissions from that area are not VATable

Is this just unique to financial services commissions

Kind regards

Simon (AM'er and IFA)

[hrbs]

Simon

The financial services is a sector which is mainly VAT exempt (though not all services).

VAT Notice 701/49 is here:
http://customs.hmrc.gov.uk/channelsP...e=document#toc

The need to register for VAT is based upon "taxable supplies" ie supplies to which VAT applies. Therefore turnover for VAT registration purposes excludes exempt supplies and those "out of the scope of UK VAT" .

To quote the VAT guide: [ http://customs.hmrc.gov.uk/channelsP...01222#P22_1114 ]

< snip>

When must I register and start charging VAT?

The supply of any goods and services, which are subject to VAT at any rate are called taxable supplies whether you are VAT registered or not.

If the value of your taxable supplies is over a specific limit, you need to register for VAT, unless your supplies are wholly or mainly zero rated in which case you may apply for exemption from registration. The limits are shown in the supplement to Notice 700/1 Should I be registered for VAT? You may be charged a penalty if you register late. The easiest way to register for VAT is by using our online Registration service.

Notice 700/1 also explains how to apply for:

• registration if the value of your taxable supplies is above the limit

• exemption from registration if your taxable supplies are wholly or mainly zero-rated

• exception from registration if you can show your future turnover will be below the ‘deregistration’ limit

• voluntary registration if the value of your taxable supplies is below the limit for compulsory registration;

• registration when you make distance sales to the UK or relevant acquisitions into the UK; and

• voluntary registration when you make supplies outside the UK that would be taxable if made in the UK.

</snip>

Hope this helped

Keith

[Keith]

take a look here to see what is reduced, zero rated and exempt of vat http://customs.hmrc.gov.uk/channelsP...yType=document

worth noting that these are among those exempt:

Betting, gaming and lotteries
Finance
Insurance

[Orotava]

one point needs clarification for affiliates and merchants considering a flat rate plan.

Do the rules relating to reverse charges (ie google adwords) still apply ?

[Orotava]

yep.........silence speaks volumes

[hrbs]

as requested by orotava ...

Adwords - the VAT is accounted for under the reverse charge rules
so for those under the flat rate scheme:
[ instructions on how to complete the flat rate return are at section 7.8 of

http://customs.hmrc.gov.uk/channelsP...ent#P109_11230 ]

the "deemed output tax" (which is calculated at 17.5% of the Adwords costs) is entered in to box 2 on the VAT return.

Unfortunately as actual input tax incurred and the Adwords "deemed input tax" is ignored for flat rate scheme members - the financial benefit of being on the flat rate scheme is unlikely to apply to those who have large Adword spends ie >45% of turnover (assuming 9% rate with first year 1% discount) or 39.5% ongoing (flat rate at 9%) [calculation assumes all turnover is either standard rated or "outside of scope"].

However, those of you who are marginally worse off may prefer it due to the reduced admin time/costs incurred, particularly if you wish to do your own VAT and not incur accountant's costs.

I would suggest you number crunch your own situation or PM me with your figures and I'll give them a "once over" .

For those of you who are not on the flat rate scheme, the treatment of Adwords has no financial effect on you.

As usual, VAT legislation is as clear as mud - but I hope the above helps.

Keith

[Orotava]

Thank you very much for a good answer Keith.

I know quite a few desperate souls who are spending 20k+ a week to achieve
a 10% ROI God help them if they chose a flate rate plan

[Reddy]

Originally Posted by hrbs the "deemed output tax" (which is calculated at 17.5% of the Adwords costs) is entered in to box 2 on the VAT return. Unfortunately as actual input tax incurred and the Adwords "deemed input tax" is ignored for flat rate scheme members - the financial benefit of being on the flat rate scheme is unlikely to apply to those who have large Adword spends ie >45% of turnover (assuming 9% rate with first year 1% discount) or 39.5% ongoing (flat rate at 9%) [calculation assumes all turnover is either standard rated or "outside of scope"].

Hi Keith,

Are you saying that the Adwords spend should be included somewhere in the VAT return for those on the Flat Rate Scheme and VAT paid on Adwords?

In my case, when Google stopped charging VAT on their invoices, I was unsure what to do about accounting for it, so I phoned the VAT helpline. I was told I needed to add the cost of the Adwords invoices to Box 6, effectively meaning I would pay 8.5% (my rate less 1% discount) in VAT. This I did for a few Returns, until I received a cheque from Google refunding the VAT I had paid to Google since the beginning of 2004.

I then spoke with my Accountant as I was unsure how to account for this refund and if I needed to pay it all to the VAT man. A guy in the VAT's technical dept told my accountant that as I am under the Flat Rate scheme I don't need to account for the Adwords invoices on the Returns and I don't need to pay VAT on them! He also told my accountant that I didnt need to pay any of the Google refund cheque to them and that I needed to claim a refund for the overpayment of VAT on Adwords which I had made in the previous 2 returns (this I did and was told to simply adjust the next VAT Return as the overpayment amount was less than £2000).

The guy in the VAT's Technical Dept referred my accountant to Public Notice 733, Section 12.5 (http://customs.hmrc.gov.uk/channelsP...nt#P571_57003).

Reading your post Keith, I am confused (again!) as to whether I am doing things correctly. Argggh, damn VAT!

regards

David

[Barry]

Just completing my VAT return for the quarter so though I'd look back over these threads to see if there was any clarification on the subject - and NO. Thought not!

According to my last accountant I would not have to pay UK VAT on the Ireland transactions as they were for services and not for products. However I have just rang the tax office again this morning and they said that I would have to add it at 17.5% to box 2 of the old VAT form.

Hmm I though, I need to backpay a hefty sum, so I rang again and was told the opposite. That I did not have to account this in my VAT return. - Great its as clear as the Thames.

You would have though that with the economy being driven forward so much by businesses now operating online and accross borders that they could have come up with a clear set of rules for online traders.

All in all even if you do have an accountant, they can also be given the mixed information by the tax office - and in the end it all lands up on my doorstep. I wouldn't like to be bitten on the ass in a few years time for a backpayment thats for sure. So what the hell do I do!? Who knows. Paperwork is stressfull enough as it is without the added vagueness of the instructions on how to prepare it.

[hrbs]

Barry/David (to answer 2 in one)

David:

The VAT Officer is right, you are not adding the Adwords to your Flat rate turnover but that does not mean it is not included on your VAT return (see reference to S7.8 below). It is reported at box 2.

Barry:

Are you talking about Adwords (service purchased) or Adsense (income outside of scope of VAT)?
Are you Flat Rate or standard VAT accounting?

The reverse charge rules as applicable to those using the flat rate scheme are clearly defined at section 7.8 of http://customs.hmrc.gov.uk/channelsP...ent#P109_11230

ie to quote (to save you going to the HMRC page)

7.8 How do I fill in my VAT return?

Filling in your VAT return is different on the scheme from the normal VAT rules because you are calculating net tax without reference to output tax and input tax. Follow the rules in the Table below where they differ from those on the VAT return form. If the value for any box is none, write none in the box. Do not leave any box blank.

Filling in your VAT return

Box 1

Use this for the VAT due under the flat rate scheme (see box 6 below). You may have other output tax to include in the box such as the sale of a capital asset on which you have claimed input tax separately while using the flat rate scheme. See paragraph 12.14.

Box 2

Use in the normal way for recording VAT payable on acquisitions from the EU see Notice 725 The Single Market.

Box 3

Will be the sum of boxes 1 + 2 in the normal way.

Box 4

Will usually be none. Though there may be a claim if you

* buy a capital asset exceeding £2,000 (inc VAT), see paragraph 12.13; or·
* can recover VAT on stocks and assets on hand at registration, see paragraph 3.7

Box 5

Will be the result of box 3 minus box 4 in the normal way.

Box 6

Enter the VAT inclusive turnover to which you applied the flat rate scheme percentage. You should also include the VAT exclusive value of any supplies accounted for outside the flat rate scheme, such as the sale of a capital asset.For example: If your VAT inclusive turnover is £10,000 and your flat rate is 8% put the £10,000 in this box and include the £800 in box 1.

Box 7

Will usually be none, except where:

* you bought a capital asset costing more than £2,000 (including VAT) and you are claiming the input tax in box 4 or ·
* you have acquired goods from other Member States of the EU.

Put VAT exclusive value in this box.

Boxes 8 & 9

Use in the normal way.

~~~~~~~~~~~~~~~~~

As you say, clear as the Thames !

Any probs PM me.


Keith