Dan.com / Afternic Network and Calculating VATable income for sales outside of the UK?

[DJ]

Hi,

I know the general advice on this will be to speak with an account, but having had a brief discussion with a couple that I know, neither of them seemed to have a clue, so I wanted to see what the general consensus was on this.

From what I can see the situation is made a bit more difficult due to the fact dan.com are located in the EU, so the guidance doesn't seem very clear, well to me anyway.

My question is what part of the sale proceeds would be classed as VATable income, if any, in the following scenarios:

Scenario 1

Buy it now (without any negotiation).

Domain Price $750
Success Fee (15%) $112.50
Total Payable to Me $637.50 (£496.93)

Now from what I am reading and been advised the VATable income could either be:

1. £0 as the transaction was not in the UK.
2. $750 as I didn't negotiate or provide a service.
3. $750 regardless as all sales are treated as income.
4. £496.93 as the transaction and service dan.com provided was outside of the UK and this was the amount I received in the UK.

Scenario 2

Buy it now (with 5 days of negotiation).

Domain Price $750
Success Fee (15%) $112.50
Total Payable to Me $637.50 (£496.93)

Now from what I am reading and been advised the VATable income could either be:

1. £0 as the transaction was not in the UK.
2. £0 as I provided a service and negotiated the deal outside of the UK.
3. $750 regardless as all sales are treated as income.
4. £496.93 as the transaction and service dan.com provided was outside of the UK and this was the amount I received in the UK.

I was just wondering how you deal with the above and if anyone has any first hand experience?

I should add that I am currently below the threshold, but am skating close to it, so I want to make sure that my rolling total calculations are correct so I don't accidentally slip over it.

Cheers!

DJ

 

[ELIFE-MZ]

I am no expert, but dan.com or any other sales platform shouldn't really come into it. If you look at the sales documents dan.com provides, the buyers invoice usually shows the registrant as the seller. If VAT is charged then they display the sellers VAT number.

We treat dan.com sales like any other and expense their fee as sales commission.

 

[DJ]

I am no expert, but dan.com or any other sales platform shouldn't really come into it. If you look at the sales documents dan.com provides, the buyers invoice usually shows the registrant as the seller. If VAT is charged then they display the sellers VAT number.

We treat dan.com sales like any other and expense their fee as sales commission.

Thanks for the reply.

Dan.com don't charge any VAT for their service to sellers in the UK as they are based in the EU. I am not trying to work out if VAT should or shouldn't be charged, I am trying to establish what part of the income generated from the sale, if any, would add to the £85,000 income threshold.

As the sale originated outside of the UK as well as the service, would it form part of £85,000 VAT income threshold?

 

[Ryan Ewen]

When selling to clients outside of the UK VAT = £0 and does not effect your £85,000 threshold.

We sell a lot of domains to overseas clients and VAT = £0

 

[ELIFE-MZ]

Sorry, misread the post. If you are close to the threshold and majority of your buyers are companies, probably better to register for VAT and reclaim VAT on reg/renewal fees.

ps. this is not financial advice, I still require the use of my knees.

 

[diablo]

Never a bad idea to get an answer straight from the horse's mouth.

Post your question here:

https://community.hmrc.gov.uk/customerforums/vat

 

[DJ]

@Ryan Ewen @ELIFE-MZ @diablo Thanks for the advice chaps, much appreciated.

I think I have an understanding of it now, but I will post on the community forum to double check, as there certainly seems to be a couple of grey areas when you read the guidance. Hopefully it is better than Nominet's community forum.

I don't really see the benefit of registering for VAT, as I imagine the savings on renewal and registration fees will be around £1,000 per year. But I will lose 20% on sales from DomainLore and buyers will probably end up making lower offers on domains if they know 20% will be added (unless they are registered themselves of course). And on top of that, it just seems like right ball ache to be honest.