VAT for affiliates

[RacingJim]

Anyone experienced in this? I haven't registered yet but may do in the future, I have NO experience of VAT so have a few newbie questions.

I was wondering for example, if I have commissions of £10k in an account, just for a nice example, and VAT is 20%, would the payment be £12k for that month, or would I receive £10k and have the VAT taken from this so I'd end up with £8k?

This might sound like a really foolish question, probably does, but I'd appreciate help from anyone in the know just to clear it up in my mind.

Also, I've been reading about the flat rate VAT scheme for affiliates:

http://tips.hrbs.biz/vat/flat-rate-v...ate-marketing/

I'm meeting my accountant on Tuesday but I've not had him long and not sure how experienced he is with VAT for affiliates and things as it's not a common business type I guess - so was hoping to get myself a bit more knowledgeable before the meeting.

[Christiaan]

I think this thread can be interesting for you:
https://www.gpwa.org/forum/vat-registered-209434.html

[Voids]

Hi mate, if you read up on this http://tips.hrbs.biz/category/affiliate-marketing/

It should put you in a good place, you could also send it to your accountant so he knows what he's dealing with ( wish more clients did this for me! )

Should go smoothly.

[LukeC]

Anyone experienced in this? I haven't registered yet but may do in the future, I have NO experience of VAT so have a few newbie questions.

I was wondering for example, if I have commissions of £10k in an account, just for a nice example, and VAT is 20%, would the payment be £12k for that month, or would I receive £10k and have the VAT taken from this so I'd end up with £8k?

This might sound like a really foolish question, probably does, but I'd appreciate help from anyone in the know just to clear it up in my mind.

Also, I've been reading about the flat rate VAT scheme for affiliates:

http://tips.hrbs.biz/vat/flat-rate-v...ate-marketing/

I'm meeting my accountant on Tuesday but I've not had him long and not sure how experienced he is with VAT for affiliates and things as it's not a common business type I guess - so was hoping to get myself a bit more knowledgeable before the meeting.

Paddy Power pay VAT on top of commissions, where applicable, and I would assume other companies do so too. A lot are outside the UK and therefore have different rules regarding paying VAT, which is worth bringing up too.

[RacingJim]

Cheers for the responses, yeh Luke it's a good point and it was mentioned in one of the linked articles from the above posts. Something about if based in Gibraltar and other such territories that there can be different rules and exemptions. It seems like a bit of a minefield really.

[Anthony-Coral]

Seems like all good advice offered so far...

My comments, based on experience but not expertise (def find an expert to speak to!) is that for online gaming, the application of VAT comes down to the location of the company servers.

Coral Connect moved from the UK out to Gibraltar about 18 months ago but for the first 6 months our servers for sports bets were still in the UK. This meant that affiliate earnings for betting activity were subject to VAT. Like most betting companies, Coral paid the extra VAT amount on top of your actual commissions. The servers are now based here in Gib so VAT is not applicable.

The reason this matters is that no matter where in the world a Coral customer is, they are considered to have placed their bet 'in' Gibraltar.

This is why the UK Governments proposed Point of Consumption tax proposed for December 2014 is so contentious. They plan to charge an additional betting tax based on the location of the customer when they place their bet.

[RacingJim]

Seems like all good advice offered so far...

My comments, based on experience but not expertise (def find an expert to speak to!) is that for online gaming, the application of VAT comes down to the location of the company servers.

Coral Connect moved from the UK out to Gibraltar about 18 months ago but for the first 6 months our servers for sports bets were still in the UK. This meant that affiliate earnings for betting activity were subject to VAT. Like most betting companies, Coral paid the extra VAT amount on top of your actual commissions. The servers are now based here in Gib so VAT is not applicable.

The reason this matters is that no matter where in the world a Coral customer is, they are considered to have placed their bet 'in' Gibraltar.

This is why the UK Governments proposed Point of Consumption tax proposed for December 2014 is so contentious. They plan to charge an additional betting tax based on the location of the customer when they place their bet.

Thanks Hodgey that has cleared up some stuff for me, it might mean that I don't have to VAT register as it seems a large amount of the programs are based out there, I'm trying to think of ones that are actually based in the UK and pay from the UK - I think bet365 sports is one.

The coming tax change for December 2014 sounds like fun, I mean that is going to cause huge headaches I would think in terms of having to tell HMRC the tax breakdown of customers just from the UK and then pay tax on that.

[baldidiot]

Thanks Hodgey that has cleared up some stuff for me, it might mean that I don't have to VAT register as it seems a large amount of the programs are based out there, I'm trying to think of ones that are actually based in the UK and pay from the UK - I think bet365 sports is one.

Off the top of my head the bookies that I work with that are in the UK for VAT are: Bet365 (for sports and games only), SkyBet and Totesport (for sports).

Just keep an eye on your VAT'able turnover as if you exceed it you have to pay the VAT since you went over, even if you didn't bill for it.

Also just FYI, if your total income (regardless of VAT status) is over the threshold and you aren't registered (ie: you earn £100k and only £50k is VAT'able so you don't need to register) you may get contacted by the VAT man about it anyway (have been a few reports of this recently on other aff forums - both gambling and mainstream). So be prepared to give historical breakdowns of where each payment came from if this happens..

[justbookies]

This may help someone, or it may serve to confuse, but basically all the firms or individual products I promote are "outside scope" for vat (ie: in gibraltar or similar) EXCEPT for these instances:

Bet365 sportsbook only (VAT applies)
Cashcade (VAT applies)
Boylesports (VAT applies)
Paddy Power Casino (reverse charge)
Paddy Power, all other products (VAT applies)
Unibet (Reverse charge)
Sky (VAT applies)
Totesport - Sportsbook, totepool & games only (VAT applies)

Disclaimer small print: I am not an expert! But I do my company vat returns every 3 months. There are lots of firms I don't promote so this is is in no way a definitive list of products where vat applies. I am based in UK. vat may cause stress, handle with care.

[RacingJim]

My accountant is going to love me. Cheers for all the info so far lads, it's invaluable stuff this. A quick scan at my figures and I think I should stay below VAT based on the ones I promote.

"Just keep an eye on your VAT'able turnover as if you exceed it you have to pay the VAT since you went over, even if you didn't bill for it."

This scares me a little! But so long as it's not backdated right?

[justbookies]

This scares me a little! But so long as it's not backdated right?

You have the option of backdating if you want to but otherwise start it from when you get the notification that you are vat registered. There wont be a situation where you don't bill for vat in the instances where it applies, so don't worry. The advantage is you get the vat back on your expenditure, which you aren't doing now. In our business being vat registered will, frankly, leave you better off. You get back expenditure vat and you just pass straight on to hmrc the vat you charge on the invoices to betting companies. Most firms we deal with in this business are 'outside scope' anyway, so they just don't enter the vat picture.

[thebookiesoffers]

This may help someone, or it may serve to confuse, but basically all the firms or individual products I promote are "outside scope" for vat (ie: in gibraltar or similar) EXCEPT for these instances:

Bet365 sportsbook only (VAT applies)
Cashcade (VAT applies)
Boylesports (VAT applies)
Paddy Power Casino (reverse charge)
Paddy Power, all other products (VAT applies)
Unibet (Reverse charge)
Sky (VAT applies)
Totesport - Sportsbook, totepool & games only (VAT applies)

Disclaimer small print: I am not an expert! But I do my company vat returns every 3 months. There are lots of firms I don't promote so this is is in no way a definitive list of products where vat applies. I am based in UK. vat may cause stress, handle with care.

I asked Unibet and they said it doesn't apply to them?

[justbookies]

I asked Unibet and they said it doesn't apply to them?

They said that to me too and in a sense they are right because they don't need to add it to the payment to you. However they are VAT registered in Malta (and that registration shows on their invoices generated in their Netrefer system) so they should be treated our end as "reverse charge" rather than "outside scope." In this scenario everything equals out on the VAT form but there is an entry in and out on that vat form, you just never see it in terms of cash to you and in reality it is similar to "outside scope" the way it nets out.

When you are dealing with a company that is registered for VAT in another EU country then it is "reverse charge" rather than "outside scope". It is a subtle distinction to a degree.

Also I have heard that Boylesports are going to be paying affiliates via Alderney and that will be changing to "outside scope" but check with the AM because I was told that by another affiliate.

[justbookies]

Just to confirm, Boylesports AM has confirmed to me what another affiliate had told me - that from last month's commission (November) onwards Boylesports is 'outside scope' for vat as it will be paid from 'Boylesports Alderney Limited' (unlike isle of man, Alderney is outside scope for vat).

[webanalysissolutions]

It all comes down to place of supply with regards to VAT. Basically, whatever the T&Cs/agreement is between you an the advertiser, it's usually stated in the contract where the operator is based. As an affiliate you are providing "business to business" services i.e. advertising, and therefore the place of supply is where the advertiser is based. http://www.hmrc.gov.uk/vat/managing/...s/services.htm
Conversely, if you were selling t-shirts from the UK to customers worldwide, then you're providing a "business to customer" service and would have to charge VAT - your place of supply is the UK.

Some operators, like bet365, have their sportsbook in the UK and casino in Gibraltar, so you'd just invoice separately.

Anyone based in the UK or Isle of Man - you're going to have to charge VAT. You charge it, they can claim it back anyway, so there's usually not a problem in operators paying it.

Deciding on whether you must go VAT registered depends on your UK VATable turnover - the turnover from those guys based in the UK or Isle of Man.

It all sounds complicated, but it's actually fairly simple once you go with it. I was afraid to go VAT registered as I thought that I might have to pay the 20% out of my commissions, and didn't know how it would be treated under place of supply rules, but it's actually not a problem at all - just a little more complex on the accounting side.

You may also want to look up the VAT Flat Rate Scheme. I think the online advertising industry is set at something like 12%, which means you could benefit from just paying HMRC a flat rate (albeit it means you can't claim back VAT on your own purchases). It may work out for you. http://www.hmrc.gov.uk/vat/start/schemes/flat-rate.htm

[hrbs.biz]

Hi mate, if you read up on this http --> tips.hrbs.biz/category/affiliate-marketing/

It should put you in a good place, you could also send it to your accountant so he knows what he's dealing with ( wish more clients did this for me! )

Should go smoothly.

Hi
Thanks for linking back to my site, I hope you found the articles useful.
One thing to bear in mind, that catches many affiliates out, is that your purchases of services from non-UK suppliers eg PPC, hosting etc etc count towards your VAT registration threshold. These purchases are known as reverse charge services and you are treated as both the supplier and customer for UK VAT purposes (for VAT only, not income or corporation tax). The current registration threshold is £79,000 of "taxable supplies" which are, for B2B sales, UK sales + Reverse Charge Services purchased.

The calculation for VAT registration is done on a rolling 12 month basis and VAT registration is required within one month of exceeding the threshold. For example, if the threshold was exceeded in December 2013, registration would be needed by 31 January 2014 and the registration would be effective 1 February 2014. If VAT registration is late, HMRC do charge penalties and details are at http --> hmrc.gov.uk/vat/start/register/register-late.htm [as a new member I can't post links, not even quoted ones, hence the edit above].

The flat rate percentage for advertising is currently 11% with a reduction to 10% for the first year of VAT registration.

Best wishes

Keith

[justbookies]

One thing to bear in mind, that catches many affiliates out, is that your purchases of services from non-UK suppliers eg PPC, hosting etc etc count towards your VAT registration threshold. These purchases are known as reverse charge services

By non-UK suppliers in this scenario you mean 'non-UK suppliers that are within the EU vat system'. It would not include non-uk suppliers from outside of the EU vat system, which would be 'outside scope' (rather than reverse charge).

[hrbs.biz]

By non-UK suppliers in this scenario you mean 'non-UK suppliers that are within the EU vat system'. It would not include non-uk suppliers from outside of the EU vat system, which would be 'outside scope' (rather than reverse charge).

Hi.
The general rule for the place of supply of services for VAT purposes is that the service is supplied where the customer belongs, not where the supplier belongs.

Reverse charges services are those purchased from non-UK suppliers (includes EU and outside EU) where the place of supply is deemed to be the UK. The UK recipient of the services must therefore take it into account for their VAT return (if registered) or include it in their ongoing VATable supplies calculation if they are not VAT registered to monitor whether or not they should be VAT registered.

Services covered by the general rule services include advertising ie PPC. Exclusions from the general rule are listed in the table at Para 2.4.3 of HMRC Notice 741A [Place of supply of services].

Other relevant sections are ...

Para 2.1 : For VAT purposes, the place of supply of services is the place where a service is treated as being supplied.

Para 2.4.2 : The B2B general rule for supplies of services is that the supply is made where the customer belongs

Para 18.10 : If you belong in the UK and receive supplies of any B2B general rule services where your supplier belongs outside the UK the reverse charge applies.

The HMRC guide to receiving services from non-UK suppliers is at http --> www . hmrc.gov.uk/vat/managing/international/imports/importing.htm#3


Best wishes

Keith

[justbookies]

Thanks Keith, I can see you are coming from the angle of counting towards whether or not to be vat registered.
However assuming I am vat registered and I am uk based but I pay for hosting of a website with a US company (not a US company with a EU section like google but a purely US company) then when filling in the VAT return my payment to them surely has to be 'outside scope.' There is surely no way that it could be 'reverse charge'. I went on one of the free hmrc vat courses they offer when you register and I basically put this to them and the answer was 'outside scope'. Some of what you are saying is beginning to confuse me on this.

[hrbs.biz]

Thanks Keith, I can see you are coming from the angle of counting towards whether or not to be vat registered.
However assuming I am vat registered and I am uk based but I pay for hosting of a website with a US company (not a US company with a EU section like google but a purely US company) then when filling in the VAT return my payment to them surely has to be 'outside scope.' There is surely no way that it could be 'reverse charge'. I went on one of the free hmrc vat courses they offer when you register and I basically put this to them and the answer was 'outside scope'. Some of what you are saying is beginning to confuse me on this.

Yes, the supply is a reverse charge service as it is not one of the excluded services in Notice 741A. It makes no difference to your VAT payment to HMRC but should be included in the standard (not flat rate scheme) VAT return using the reverse charge rules.