Paying VAT for Articles

[craig96]

I got some articles wrote by a company just to try them and we arranged a price per article. They have now sent the invoice and said I need to pay even more for VAT. Can they do this? This has never happened before.

Thanks

[baldidiot]

If they're in the UK and you're in the UK then yes, they can charge VAT. In fact if they're VAT registered they have to - sucks they didn't mention this to you upfront though...

[craig96]

Thanks,

Why would you want to become VAT registered? What's the point?

[baldidiot]

If you make over £70k a year of VAT-able revenue, you have to by law in the UK. So if you're a shop in the UK you need to register once you hit this number. It's also doesn't matter if you're self employed or a Ltd company.

For affiliates though, it's not quite as simple as it's 70k of VAT-able earnings and because we work in a global industry not everything is subject VAT - it basically depends on where the aff program is based. That's why totesport etc.. let you charge them VAT if you're registered. You might make 100k but only have 50k of revenue that is subject VAT. The flip side is you can reclaim the VAT you pay.

That's my understanding anyway - it might be worth talking to an accountant if you need clarification for your situation!

[TheGooner]

VAT (also known as GST in other jurisdictions) is an end consumer based tax - and businesses collect VAT on local invoices, and can claim back any VAT that is paid out for local services.

IF you're in business and you are not VAT registered then you are probably losing money as a result of your ignorance / inaction.

In our case (down here in New Zealand) we charge ZERO dollars in local invoices as there are no local online companies, but pay between $100K to $150K for various local goods and services all of which has GST attached at 15%. So as a GST registered business we can claim ALL of the GST that we have paid back - which amounts to around $20K per year.

We don't HAVE to be GST registered because we are under the threshold of local business generated (NZ has very similar rules to UK) but obviously it's in our interests to do so.

[TheGooner]

Why would you want to become VAT registered? What's the point?

If you are in affiliating to make money - then I suggest that you search your local library / bookstores for some small business primer books. Taxes are part of business, as are a lot of legitimate business expenses that you can claim to reduce those taxes.

Income taxes and VAT are not complex, but need to be dealt with correctly, or else it can become a REAL hassle dealing with potential back-taxes, fines, and penalty interest for failing to deal with your tax liabilities properly.

It's really not too difficult - but ignoring them is NOT the right way to handle it.

[ocreditor]

If they're in the UK and you're in the UK then yes, they can charge VAT. In fact if they're VAT registered they have to - sucks they didn't mention this to you upfront though...

Baldidiot is right, but I think "morally" so to speak the onus is on them to be upfront about the fact that VAT was not included in the price quote they gave you. Not sure it would help, but you could try arguing with them that the quote they gave you was misleading. At one point in time I used to write content freelance - I understood completely that it was my job to let a customer know EXACTLY how much I would be charging them for the work.

[craig96]

Thanks and sorry for the long reply people.

Yeah, I now about paying Tax, I just don't think paying VAT on the top of this is fair.

I know for example buying a Mcdonalds, even though you are not aware of it you are paying a small VAT change. But you have to work for a company let's say and you need to pay Tax each month.

What is even stupider, if you win £1,million on the lottery you never keep the full £1, million, you have to pay tax on it. I bet you even have to pay VAT buying the lottery ticket.

[baldidiot]

Thanks and sorry for the long reply people.

Yeah, I now about paying Tax, I just don't think paying VAT on the top of this is fair.

I know for example buying a Mcdonalds, even though you are not aware of it you are paying a small VAT change. But you have to work for a company let's say and you need to pay Tax each month.

What is even stupider, if you win £1,million on the lottery you never keep the full £1, million, you have to pay tax on it. I bet you even have to pay VAT buying the lottery ticket.

/sidenote - Actually lottery winnings are tax free in the uk, just like other gambling income.

VAT often isn't mentioned in UK business -to- UK business transactions as the assumption is there that you're vat registered. I know that with plenty of design agencies and hosting companies the price doesn't include VAT. Some say the price is excluding VAT, some just never bring it up.

[Voids]

/sidenote - Actually lottery winnings are tax free in the uk, just like other gambling income.

VAT often isn't mentioned in UK business -to- UK business transactions as the assumption is there that you're vat registered. I know that with plenty of design agencies and hosting companies the price doesn't include VAT. Some say the price is excluding VAT, some just never bring it up.

As an account in training I can confirm the above is the usual. Business don't normally mention the Gross figure because your output & input VAT are netable against each other. I.E you buy articles for £100 + £20 Vat & Sell them for 100 + £20 Vat. You've paid £20 & received £20, so you owe HMRC nothing. You should have stated you wern't VAT registered when liasing with them .