selling books and vat registration

Stuart_P

do you need to register for vat if sales from books (zero rated) are more than £73000 in a year?

or because they are zero rated, they are exempt from this calculation?

JasonLVC

Books are zero rated - a taxable supply - and so making sales over £73k would still require you to register for VAT.

Don't confuse zero rate with "no VAT". No VAT (exempt) means you don't charge VAT at all nor can you reclaim any VAT on your purchases or even register for VAT.

Zero rate is a rate of VAT, just happens to be Nil and so you charge VAT at 0% on books but can still reclaim your purchase VAT and still have to register for VAT.

If your only sales are books, you still have to register for VAT when you hit £73k as the law states if you make taxable sales over £73k you must register, but you can tick a box on the registration form seeking "exemption" from registration by virtue of you only making zero rated supplies (you still must fill in the form and "register" and send to HMRC but HMRC will then see you want exemption from registration and accept this), the important thing is you must notify HMRC when you hit £73k and so you've done that by registering and then asking for exemption from registration.

Exemption from registration does not mean your book sales are then exempt, they are still zero rated (taxable sales) just that you have permission from HMRC to not bother with registering for VAT in the future.

As you appear to only make zero rated sales, provided you don't mind the extra admin of doing 4 returns a year, makes sense to register for VAT as you can then reclaim any VAT on your purchases (not the books you buy in of course, but your overheads such as storage facility, computer, office, utilities, etc) so may only be a few grand a year but why not for a bit of effort without any affect on selling price to end customer?

Crowqueen

That should honestly be linked to from the tips thread - hopefully Soo will agree but that's the best explanation I've seen about the difference in tax situations.

RFW

It is an excellent explanation, a while ago I was selling a high volume of zero rated stock and had deluded myself into thinking that I would get to a point where I could deregister for VAT. It does actually put you in a good position as you aren't charging VAT but will often be paying it, so HMRC can end up paying you.

Also, something else that came up on here a while ago if you use Royal Mail non VAT services and you send zero rate parcels the VAT on the postage is charged at the same rate as the item, so on books it would be zero.

Quite off topic, but is anyone else irked by the fact that downloadable books are subject to VAT at standard rate?

Crowqueen

RFW wrote: »

It is an excellent explanation, a while ago I was selling a high volume of zero rated stock and had deluded myself into thinking that I would get to a point where I could deregister for VAT. It does actually put you in a good position as you aren't charging VAT but will often be paying it, so HMRC can end up paying you.

Also, something else that came up on here a while ago if you use Royal Mail non VAT services and you send zero rate parcels the VAT on the postage is charged at the same rate as the item, so on books it would be zero.

Quite off topic, but is anyone else irked by the fact that downloadable books are subject to VAT at standard rate?

Yes, but at least for the Kindle they are about £5 cheaper anyway than buying them in hard copy and don't take up so much space.

I don't know about the one WHSmith is touting though - I think I've seen some hugely inflated prices that make me glad I went for the Kindle even though it's extremely fragile.

JasonLVC

RFW wrote: »

Quite off topic, but is anyone else irked by the fact that downloadable books are subject to VAT at standard rate?

The zero rating is applied to "printed matter", not for "books", it just so happens books are usually printed on paper which is why they are zero rated, but an electronic book is not printed on paper and thus the zero rate cannot apply.

The problem is, in Europe, books are not zero rated, they are reduced rated (France is 7%), so the UK is unique in having books zero rated. The UK cannot add e-books to the zero rate list as we're prohibited from adding new things to the list. At best we could treat e-books as reduced rated (5% in UK) supplies but then that is still inequitable between printed books and downloaded ones, plus by doing so it leaves the UK exposed to an attack from Europe who will say we cannot have two types of VAT treatment for books (reduced + zero rate), so could jeapordise all the zero rating we enjoy on newspapers, magazine, etc.

The UK have taken the view that e-books are not a supply of books but a supply of electronic data (which is standard rated, 20%) to make it suitably different from a book, problem is, Europe has already defined an e-book as a book, so its best the UK doesn't rock the boat too much or we could see all books being treated at 5% instead of 0%. Its all being reviewed in Brussels in 2015, so will have to wait until then.

http://www.thebookseller.com/news/uk-government-holds-firm-e-book-vat.html