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Taxing Questions

     
11:40 am on Mar 26, 2004 (gmt 0)

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Pretty new top this game, so excuse any ignorance I show.

I have a UK site generating 6K per month income through what I would class as an affiliated partnership. Basically we supply customers who click through our site to buy a service on site B (like booking a room for a few nights).

My question is as we don't directly supply the customers anything, we provide a service (potential customers) to site B, and Site B pays us a % if the customer purchases from their site.

Basically, is standard VAT inevitable? Are there any tips that you'd share so as I can reduce VAT contributions.

1:37 pm on Mar 26, 2004 (gmt 0)

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Is the affiliate partner based outside of the EU?

If so you do not have to pay VAT on the income you make from the program. This also means that you will not be VAT registered and cannot claim VAT back on purchases.

If it is based in the EU and you are generating 6K+ in a month you will have to pay VAT on the income. You will also be able to claim back VAT.

You should aim to get VAT paid out on top of your % commission by the provider.

"we don't directly supply the customers anything"

This doesn't make a difference, you are providing a service to the affiliate company.

9:59 pm on Mar 26, 2004 (gmt 0)

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I appreciate your response, and thank you. We are based in the EU,(UK) and so is the provider whom we supply refferals.

I'll speak with an accountant to see what he has to say, but I thought it useful to post to see if anyone would share any in sights into reducing this hefty tax.

3:04 pm on Mar 27, 2004 (gmt 0)

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If both your customers and you are VAT registered then VAT should not cause you any problem. You charge your customers VAT on top of the commission payment. This does not cause them any additional expense because they can claim back any VAT that they pay you.

You have to pay the VAT to the taxman, but you can deduct any VAT you have paid on anything used in your business. So overall you should actually benefit in that you can claim back the VAT on your inputs (as compared to a situation where you are not registered).

If your customers are not VAT registered then there is a financial implication as mentioned in the other posts.

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