Confused with VAT

premiumz

Hello,
I'll be brief.

I earn money online through being an affiliate for amazon and earn money through adsense.

My question is how can i register and pay VAT if i cant actually charge VAT?

For example being an amazon affiliate i cant control the product price etc as thats the sellers responsibility.

So i don't understand what i am meant to do here? As i understand it, when you pay VAT you end up getting it back but in this case i cant charge anyone VAT so it comes straight from my pocket and i don't get anything back?

Anyone have any knowledge of this?

Many thanks

thenudeone

To register for VAT you generally have to have an annual sales income (not profit) above the threshold (currently £79k)
http://www.hmrc.gov.uk/vat/start/register/when-to-register.htm

If you are below that threshold then you can't reclaim any VAT paid but neither do you have to add 20% to the amount you charge customers.

Lots of small tradesmen are in exactly this position. Registering for VAT would harm them because most of their cost is salary/wages with no VAT to reclaim, yet they would have to charge 20% more for the product (and so be uncompetitive compared with non-VAT-registered tradesmen)

premiumz

Hello,
Your post hasn't really answered my question.
I know the threshold and i know small tradesmen etc add 20% to what they charge.

What i said was, I can't alter the price for products i sell as i am an affiliate which means the actual product owner/seller charges VAT. So i couldn't add a second lot of VAT on the same product..

uknick

OP, this is not my area of expertise but, there are organisations that don't normally charge VAT but they register and reclaim their input VAT. Public Sector organisations and charities come to mind. Whilst they do charge output occasionally, by far the bulk of their claim is recovering input VAT.

Have you tried calling the HMRC VAT helpline? I've found them very useful in the past, knowing some very obscure VAT rules.

chrismac1

If you registered for VAT, on the basis of your post you'd be nuts as you are not compelled to until your last 12 months' taxable sales have been £79k.

Just like your corner shop, you correctly observe that you charge a price. Let's say that is £60 for a given product.

If you were registered, that £60 is DEEMED to be inclusive of 20% VAT, assuming the nature of your business means the place of supply is the UK. So that is £10 you'd be handing over to HMRC on the £60.

Against that you can claim VAT on your inputs. Note that internet places like Amazon are somewhat of a minefield as some resellers are VAT-registered and some are not, so anyone who registers expecting to see a 16.7% discount on Amazon purchases often turns out to be disappointed.

If you Google Amazon reseller VAT you'll see what I mean.

googler

Why would you want to 'register and pay VAT'?

googler

thenudeone wrote: »

To register for VAT you generally have to have an annual sales income (not profit) above the threshold (currently £79k)

If you are below that threshold then you can't reclaim any VAT paid but neither do you have to add 20% to the amount you charge customers.

No, the threshold is the point at which you MUST register for VAT. It's optional below that.

You must charge and reclaim if turnover is above the threshold, because you must be registered, but whether or not you do this below the threshold is dictated by whether or not you're registered, not by your level of turnover.

DCodd

premiumz wrote: »

Hello,
I'll be brief.

I earn money online through being an affiliate for amazon and earn money through adsense.

My question is how can i register and pay VAT if i cant actually charge VAT?

For example being an amazon affiliate i cant control the product price etc as thats the sellers responsibility.

So i don't understand what i am meant to do here? As i understand it, when you pay VAT you end up getting it back but in this case i cant charge anyone VAT so it comes straight from my pocket and i don't get anything back?

Anyone have any knowledge of this?

Many thanks

Ask Amazon how they deal with a VAT registered affiliate. They may have a self billing agreement with their larger affiliates that you could take advantage of.

Self billing is where you give your client your VAT number and proof that you are VAT registered and your client pays you your commission inc VAT (Plus VAT) as they can claim it back, they issue a VAT invoice to themselves to cover the VAT content and you do the same. That way you just pay over to HMRC the VAT content of the payment.

antrobus

premiumz wrote: »

....I earn money online through being an affiliate for amazon and earn money through adsense.

My question is how can i register and pay VAT if i cant actually charge VAT?....

Amazon says;

Information for Associates established in the EU but outside Luxembourg

Amazon does not pay VAT on your referral fees. If you are an EU resident taxable person established outside Luxembourg you are not required to charge VAT to Amazon EU Sarl. Instead Amazon EU Sarl accounts for the VAT due on this supply under the reverse charge mechanism. This is because, under European VAT legislation, the marketing services provided by EU associates established outside Luxembourg are subject to VAT in the country where the recipient of the service is established (refer article 44 of the VAT Directive 2006/112/EC).

Even though the services are not subject to VAT in your own country European VAT legislation generally requires you to issue a VAT invoice for services provided to other companies established in the EU. You would not charge VAT on this invoice but you would need to mention Amazon EU Sarl Luxembourg VAT number on the invoice (LU20260743), include the reason why you do not charge VAT and ensure you meet all the other requirements of a VAT invoice as applicable in your country. If in doubt you should verify the requirements with your local tax office or with your tax adviser.


https://affiliate-program.amazon.co.uk/gp/associates/help/t18/a1?ie=UTF8&pf_rd_i=assoc_help_t18&pf_rd_m=A3P5ROKL5A1OLE&pf_rd_p=&pf_rd_r=&pf_rd_s=assoc-center-2&pf_rd_t=501&ref_=amb_link_1

Prothet_of_Doom

thenudeone wrote: »

[STRIKE]

To register for VAT you generally have to have an annual sales income (not
profit) above the threshold (currently £79k)


http://www.hmrc.gov.uk/vat/start/register/when-to-register.htm





If you are below that threshold then you can't reclaim any VAT paid but
neither do you have to add 20% to the amount you charge customers.





Lots of small tradesmen are in exactly this position. Registering for VAT
would harm them because most of their cost is salary/wages with no VAT to
reclaim, yet they would have to charge 20% more for the product (and so be
uncompetitive compared with non-VAT-registered tradesmen)[/
[/STRIKE]QUOTE]

BULL !!!! !!! :rotfl:Well some of it anyway.
Not all!!! :rotfl:
You can register for VAT at any turnover.
You could be on flat rate if that suits, but if your customers are NOT VAT registered, they will not be able to claim back the VAT, so you'll be competing at a higher price (You got that right).

brendon

You are not charging VAT to the customer, you are charging VAT to Amazon. You are charging for services rendered to Amazon, you are not directly selling to a customer -- Amazon is your customer. If you had to charge VAT to Amazon, you would just send them an invoice charging it. In this case, because your customer is a business in a European country which isn't your own, you simply send them an invoice which has the VAT amount, but which is not included in the total invoice amount, and write the words "Reverse charge: VAT Act 1994 Section 55A applies" on it. See this page.