Forum Moderators: skibum
CJ (based in the USA) tell me they zero-rate payments made to the UK but do I need to declare this to the tax man and pay the relevant VAT from my own pocket?
I don't want to call the VAT help line unneccessarily as they "mark your account" and I don't fancy encouraging time-consuming investigation.
Cheers
Neil
There is always good reason to be suspicious of tax authorities. :)
I'm no expert but the last time I heard it was the case that people were not declaring it and using the argument that CJ was based in the US. The counter argument that UKCE is using is that some of your visitors were based in the UK. It is their belief that you should track the UK/european visitors and pay VAT on that. A completely insane idea but one they will fight for nonetheless.
As my Commission Junction payments are relatively low, I don't mind arguing the toss on this one if they ever ask.
I'm more concerned about my payments from BeeFree (Reporting.net) who have now been bought by Commission Junction.
Like CJ, BeeFree's reporting system is pretty naff and it's impossible to ask them a question by telephone. Because of this I'm getting payments for thousands of pounds from (European) company's that I'm not sure are VAT inclusive or not. With my VAT demand due by the end of this week. BeeThree still haven't replied after a fortnight of e-mail bombardments from us.
If I have to send a VAT invoice to them at a later date, I don't fancy my chances of it being paid.
1.That a European merchant had a contract with an American company (eg BeeFree) to pay them commission on their sales.When that merchant fills up its Vat form there is no Vat due as it does not fall within the "European Union" box on the Vat form
2. You or I have a separate contract with (American) BeeFree as affiliates, not with the (European) merchant. BeeFree pay you a commission on sending them sales, it is not the merchant that is paying you. That is not vatable either.
3. Presumably if my arguement was wrong, and Vat was due, it would come out in the wash anyway. ie by a devious route the vat would be both paid and recovered in full, Vat in UK would be no better off.
If you do run into problems, you have to go up to the top in the Vat office, the local jobsworth tend to be a bit blinkered. The higher echelons do tend to be more reasonable when it is a zero sum calculation. I managed to even get a full appology from the Inland Revenue on a similar problem that I had with the local jobsworth expecting me to recoop money that I was going to reclaim in full.
They don't buy that. No matter how high up you go. It is not sufficient that it is a zero sum game, they need to have all the figures anyway. The HMCE rottweiler works a lot differently to the IR's teddy bear. When the two merge (which is proposed) we may well see a grizzly bear with a rottweiler's mild and gentle demeanour.
The HMCE rottweiler works a lot differently to the IR's teddy bear.
I like the analogy.
As you say they are not "nice" people. They were a bit tardy in paying me back a large sum they owed me, I was told I could surcharge them a four figure sum, which I did. They paid it grudgingly.
Then proceeded to give me the full inspection treatment for the next 3 years.
You've certainly made me feel a lot better in ignoring the payments in my VAT return.
However, one interesting e-mail I got back from Accor (who partner with BeFree) was...
"Befree is merely just passing on the payments from Accor. He cannot add VAT."
Which didn't really answer my question of "Can you tell me if you include VAT in our payments?"
When you make a purchase from a shop it's not your responsibility to ensure VAT is paid. In this relationship you are the shop and they are paying you.
When you make a purchase from a shop it's not your responsibility to ensure VAT is paid.
That to me is the nub of the thing
If I buy from a shop, OK I am not responsible for esuring that they pay their VAT...
..but they are responsible for their own Vat returns, and whether they charged me Vat. If they did, then they have to pay HMCE, if they did not (as with an export) then the item is exported Vat free, and the shop put it through their books as non vatable.
My assumption would be that a hotel chain in Europe (eg Accor) put the payments through their books at zero Vat in this way - mind you if you can get any reply from Accor hotels you are a better man than I. A ruder bunch in refusing to answer emails I have yet to find.
When they send you the payment it's for £x. There's no indication if this £x includes VAT at 17.5% already, or whether or not I need to add 17.5% on myself.
As some of their agents are EU based, and others UK based it's bound to differ from one affiliate scheme to another. If I could get a straight answer from BeeFree or any of their affiliates it would help.
I never read my contracts either
"Since the commission payment is from France, (Accor is a French company) there is no VAT between Accor and Befree or Accor and his UK based affiliate.
Befree is merely just passing on the payments from Accor. He did not add any VAT to Accor UK based affiliate."
My reading into that is my payment comes from the USA, so I don't need to pay VAT. If I do have to make a VAT payment, how do I reimburse myself with what I've had to pay?
If the VAT man makes me declare these payments, don't I just declare it as zero percent on my EC Sales list and leave the extra payment up to Accor? After all they're paying me, not the other way around.
If the commission is from a French company VAT is due on it. A good test is - who you are invoicing? Who do you have the contract with? If you are raising an invoice on a non-EC country you'll raise it with no VAT. If you are raising it on an EC country then you have to include the VAT in the amount you've received i.e. you lose a big chunk. Maybe it's time to check with the VAT office or an accountant. Also, "zero rated VAT" is different to "VAT exempt". I sell goods to Europe. The amount I receive in cash includes a VAT component. I account for that and pay it to HMCE. In most cases I have to charge the VAT here rather than giving the customer the option of paying VAT at port of entry. The chances are that if they haven't specifically said that they are paying the VAT then you have to deduct that from what you received.
You don't "reimburse" yourself with VAT :). Input tax can be claimed back. This is not a purchase you're making, it's a sale.
I admit I'm new to all this VAT malarkey but my understanding is that when supplying a French-based VAT registered company, I can zero rate the payment and declare it on the VAT EC Sales List form, together with their VAT Registration number. They are then responsible to pay VAT to the French authorities.
Isn't this exactly the same with what Google Adwords do? They are based in Ireland (21% VAT), but zero rate supplies to the UK, which I then have to declare and pay 17.5% tax on.
If this is not the case, then Accor should be adding VAT (at UK rate) to their existing payments. They tell me they can not do this.
The fact the payment is passed through BeFree (an American company) complicates matters even more.
Still none of us are experts, and I can see that you do not want to contract Vat directly and get it logged.
The other option is to get your accountant to contact them, so that the query is not from you. Though with current rules, the accountants may have to declare who you are if you discuss it with them, you will need to ask before you discuss.
Assuming you get accountants to file your tax returns, they may well inquire about the Vat aspects of the transaction. My accountants have never suggested that I am liable for Vat on my overseas income (which is declared in an open way)
