VAT Question - Help Please

[Nigel]

Hi,

We're considering registering our company for VAT and wondered what effect, if any, this would have on our pay-per-click revenue. I have read on the inland revenue website that you only need to register for VAT if 'taxable supplies' exceed £60,000 in any 12 month period. It goes on to say that 'taxable supplies' are those made in the UK. So is revenue from sedo exempt because they are based in Germany? and is Google adsense also exempt because they are based in the USA?

I assume that Google (who also supply sedo's) ads would charge out VAT in full at the point of sale to any UK advertiser who is paying for traffic, so it seems to me that any further collection down the line would amount to multiple taxation of the same 'click'. The people clicking on our sedo and google ads would be from all over the world (including the UK) so again it wouldn't appear correct that any VAT would be payable to the UK inland revenue for an ad that was clicked on from someone in Australia. In addition our sedo ads are served up by them in Germany so does this make them exempt? It would be very helpful if any UK VAT registered company/individual could give me some insight into this. Many thanks.

 

[tifosi]

Interesting question... and I'd like to have 60K ppc revenue please!

 

[FC Domains]

You have to contact the Customs & Excise office and ask them. They will then give a ruling with a reference number, that you can then quote back.

Or not.

Actually they don't know either and are waiting until they can work out what's going on.
Meanwhile you guess and provided that you are up front and don't look as if you are trying to 'pull a fast one', they will be reasonable.

I've just had a VAT inspection. They signed it all off and were happy, but won't give a ruling.

 

[olebean]

Is the question the point of supply, Not the point of payment. As you suggested there is no ruling, this in part is due to world governments non-unilateral agreement on the point of sale/agreement.

I would investigate where each company is registered, if they are abroad, I would raise an invoice to that company and deal with VAT similarly. That would equally depend on whether you are structured for cash accounting or invoicing

From what I understand, a number of people lease the domains to offshore companies, avoiding this potential problem.

 

[Nigel]

Thanks for the feedback guys

 

[Brassneck]

Anybody have any further thoughts on the VAT question. I'm pretty close to having to register but wondering exactly where income from parking programmes fits in, plus domain sales which are handled through Sedo. I can see that you can add VAT registration information to Sedo account - presumably they then issue you invoices which show VAT included in your revenue and sales? Anybody any experience?

Cheers
Stephen.

 

[gimpydog]

This is covered by section 11 of notice 741

http://customs.hmrc.gov.uk/channels...ntent&id=HMCE_CL_000346&propertyType=document

If you are dealing with parking revenues from companies outside the UK then I am told that these are outside the scope of UK VAT. I presume that earnings from a UK parking service (is there one?) would be liable.

So if, in one year, you sold domains worth £40k & also earnt £40k from parking with (say) Sedo you would not need to register, but you might wish to to recover VAT incurred in relation to supplies. This is covered in notice 700

http://customs.hmrc.gov.uk/channels...ntent&id=HMCE_CL_001596&propertyType=document

It is always best to consult HMRC in relation to your own circumstances. Try the National Advice Service on 0845 010 9000 for the address of the relevant VAT Contact Centre, then drop them a line outlining your position & ask for written confirmation of their advice. They usually reply within a week or two.

I'm sure I read somewhere that there was a bit of a stink with Goog & VAT. The gist of it was that Goog charge VAT to advertisers through their local offices, but pay publishers from their US offices & therefore, it was suggested, are pocketing the difference. I can't see Gordon Brown putting up with that for much longer now we've got all those new prisons to build

 

[sedo]

Hi all,

Thanks gimpydog for the links and explanation. The point of supply for UK parking clients is indeed Germany.

I just wanted to reiterate something in regards to selling/buying domains. When you sell or buy through Sedo, you are not entering into a contract with Sedo, but rather through Sedo. This means that if you sell a domain from the UK to another UK individual, depending on the amount of the sale, you may be eligible for UK VAT. You are then the point of supply.

Kind regards,

Brad
[email protected]

 

[paul]

Since Sedo/Brad is reading this thread I just thought I'd get out a gripe, I have with you.

I'm vat registered and therefore charge vat on all my sales. When I sell a domain through you I not only pay commission on the sale but also on the vat I have to pay, to the vat man

Say I sell a domain for £1000 + vat (£1175.00)

Sedo's commission is £117.50 not £100 as it should be.

Therefore I am paying 11.75% commission on my sales through you not the £10% you advertise

Any comments Sedo/Brad?

 

[olebean]

Since Sedo/Brad is reading this thread I just thought I'd get out a gripe, I have with you.

I'm vat registered and therefore charge vat on all my sales. When I sell a domain through you I not only pay commission on the sale but also on the vat I have to pay, to the vat man

Say I sell a domain for £1000 + vat (£1175.00)

Sedo's commission is £117.50 not £100 as it should be.

Therefore I am paying 11.75% commission on my sales through you not the £10% you advertise

Any comments Sedo/Brad?

Sedos commission on that analogy is £175-00 or 17.5% not £100 as it should be?

 

[paul]

Sedos commission on that analogy is £175-00 or 17.5% not £100 as it should be?

10% of £1175 is £117.5 as I stated not £175 and therefore 11.75% of £1000

What I'm getting at is, why should I pay 11.75% commission and someone who is not vat registered pay 10% ?

 

[sneezycheese]

What I'm getting at is, why should I pay 11.75% commission and someone who is not vat registered pay 10% ?

...it shouldn't happen and I'm not sure of the legal implications of such actions.

I would suggest making a formal complaint via [email protected] and see what comes back.

Regards,

Sneezy.

 

[olebean]

10% of £1175 is £117.5 as I stated not £175 and therefore 11.75% of £1000

What I'm getting at is, why should I pay 11.75% commission and someone who is not vat registered pay 10% ?

Is VAT chargable in Germany on an exported service?

Can you claim your VAT back?

Does Sedo's T&C mention prices subject to VAT?

 

[paul]

Is VAT chargable in Germany on an exported service?

Can you claim your VAT back?

Does Sedo's T&C mention prices subject to VAT?

Sedo are not charging vat they are just taking commission on the vat I have to pay

When I sell something for £1000 + vat I am selling for £1000 and collecting the 17.5% on behalf of the inland revenue. I never own that 17.5% I just act as an unpaid tax collector

 

[keys]

Surely Sedo should charge commission on the price excluding VAT, then it would be clear and fair.

 

[olebean]

Sedo are not charging vat they are just taking commission on the vat I have to pay

When I sell something for £1000 + vat I am selling for £1000 and collecting the 17.5% on behalf of the inland revenue. I never own that 17.5% I just act as an unpaid tax collector

So lets get this right...

Your suggesting that sedo should check on each and every sale whether VAT is applicable, they should also verify by what every means this is the case....


Sorry guys this aint a sedo issue its your issue which you should tackle with some creative accouting......

 

[sedo]

Hi all,

VAT is applied to the overall sales price of a domain, before any Sedo fees are taken out. This unfortunately isn't something that Sedo has come up with, rather the HMRC is in charge of dictating (for lack of a better word) when VAT is applied.

The transfer fee has always been calculated the same way: it comes out of the overall sales price. In the same way you would need to take the transfer fees into consideration when selling, you also need to take VAT into consideration.

There is a section about VAT and sales prices in our FAQ, which can be found here:
Sedo FAQ - How does VAT (sales tax) affect me when selling a domain on Sedo?

Here is the section that addresses your concern:
- Sellers should always be aware that the price they sell their domain for is the gross price. In most cases, as the majority of buyers are not VAT liable companies, a domain you sell for £ 2,000 will net you £ 2,000. However, if the buyer is trading as a VAT liable company and requests a VAT invoice from you, you will then have to pay VAT on the sale in the country you are operating in (17.5% in the UK), thus your net gain would be £ 1,650.
- It is therefore worth bearing in mind while replying to potential bids that you should ask the buyer if he is trading as a VAT liable company. If so, then you should alter your sales price accordingly so that your net gain remains the same.
- Another tactic may be to set all of your asking prices as your desired net price plus your country's VAT to ensure you do not sell the name at a price which does not match your expectations.
- If you are trading on Sedo as a VAT liable company, you need to choose 'Company' in your user account and enter a valid tax registration number.

I hope this information helps. Let me know if you have any other questions.

Kind regards,

Brad
[email protected]

 

[fred]

Hi all,

VAT is applied to the overall sales price of a domain, before any Sedo fees are taken out. This unfortunately isn't something that Sedo has come up with, rather the HMRC is in charge of dictating (for lack of a better word) when VAT is applied.

The transfer fee has always been calculated the same way: it comes out of the overall sales price. In the same way you would need to take the transfer fees into consideration when selling, you also need to take VAT into consideration.

There is a section about VAT and sales prices in our FAQ, which can be found here:
Sedo FAQ - How does VAT (sales tax) affect me when selling a domain on Sedo?

Here is the section that addresses your concern:
- Sellers should always be aware that the price they sell their domain for is the gross price. In most cases, as the majority of buyers are not VAT liable companies, a domain you sell for £ 2,000 will net you £ 2,000. However, if the buyer is trading as a VAT liable company and requests a VAT invoice from you, you will then have to pay VAT on the sale in the country you are operating in (17.5% in the UK), thus your net gain would be £ 1,650.
- It is therefore worth bearing in mind while replying to potential bids that you should ask the buyer if he is trading as a VAT liable company. If so, then you should alter your sales price accordingly so that your net gain remains the same.
- Another tactic may be to set all of your asking prices as your desired net price plus your country's VAT to ensure you do not sell the name at a price which does not match your expectations.
- If you are trading on Sedo as a VAT liable company, you need to choose 'Company' in your user account and enter a valid tax registration number.

I hope this information helps. Let me know if you have any other questions.

Kind regards,

Brad
[email protected]

I'm not a vat expert, I'm not even vat reg'd, BUT....

Surely that is wrong? The vat status of the buyer is not the deciding factor, it is the vat status of the seller.

i.e.
if Non-VAT sells to Non-VAT = no VAT
if Non-VAT sells to VAT = no VAT
if VAT sells to Non-VAT = VAT charged
if VAT sells to VAT = VAT charged

or am I missing something here?

 

[olebean]

Here is the section that addresses your concern:
- Sellers should always be aware that the price they sell their domain for is the gross price. In most cases, as the majority of buyers are not VAT liable companies, a domain you sell for £ 2,000 will net you £ 2,000. However, if the buyer is trading as a VAT liable company and requests a VAT invoice from you, you will then have to pay VAT on the sale in the country you are operating in (17.5% in the UK), thus your net gain would be £ 1,650.
I hope this information helps. Let me know if you have any other questions.

Kind regards,

Brad
[email protected]

Brad

Have a word with your advisors the "tip / guildelines" appears miss-leading at best...... IMO its a load of bolux, crepe and doesn't address the issue originally suggested in the post...

 

[sneezycheese]

I'm not a vat expert, I'm not even vat reg'd, BUT....

Surely that is wrong? The vat status of the buyer is not the deciding factor, it is the vat status of the seller.

i.e.
if Non-VAT sells to Non-VAT = no VAT
if Non-VAT sells to VAT = no VAT
if VAT sells to Non-VAT = VAT charged
if VAT sells to VAT = VAT charged

or am I missing something here?

...fred - I just noticed your post after reading the VAT information Page (Sedo VAT FAQ's) on the Sedo website and I don't believe you are missing something.

Like you say - "that is wrong" - if I was to sell something and charge VAT (when I'm not VAT registered) I could get into serious dodo!

Sedo's VAT statement on their website makes no sense whatsoever!

So is there something fishy going on here?

A coherent Sedo response on this matter would be appreciated.

Regards,

Sneezy.