Adsense and UK VAT

Has anyone had official confirmation?

[leveldisc]

No-one seems to know the answer to this.

Does a UK VAT registered company have to pay VAT on adsense income?

The income is from uk hosted sites.

My accountants say no, which surprises me.

Anyone had any direct dealings with the Customs & Excise people over this?

[olwen]

When GST which is similar to VAT was introduced in New Zealand I was involved in meetings with regard to incorporating it into computer systems.

Here's how I think it works for NZ. I'm picking it would be similar for the UK.

Our contract is with Google who are in the USA, and paying you from there, so no GST should be payable. If at some stage the payment was to originate with an NZ division of Google, they would have to add GST to their payout for NZ payments. They could ten claim back the GST to offset against the GST they paid on their adwords income.

[leveldisc]

Olwen,

That's pretty much how I understand from the UK point of view.

I just wonder if anyone has had official dealing with our customs & excise - not a pleasant experience.

[Macro]

See msg 2 here: [webmasterworld.com...]

[leveldisc]

Thanks,

It seems there is no definite answer.

Some people pay it, some don't.

Has anyone here had any official contact with HMCE?

[foxtunes]

Thanks for bringing this question up, interested to learn the answer to this.

[Macro]

>>Has anyone here had any official contact with HMCE?

Knowing HMCE's position - getting a clarification from them may not be in your best interest. They will maintain that it's up to you to track your visitors' locations and account for the receipts accordingly.

[7_Driver]

We don't pay VAT on our AdSense income.

We had a thorough VAT inspection recently - and they didn't raise it as an issue. (I don't think AdSense was discussed at all in fact - AdWords outgoings were).

We make a reasonable amount through AdSense - I think they'd have spotted it if it was a problem.

I'm not clear why the visitor's location would be relevant - our contract is with Google in the USA - not with each individual site visitor...

[Macro]

As with any tax authority HMCE is always keen to maximise it's revenue. To that intent if there's anything that they can argue is taxable, they argue it. In fact, they are legally required to argue it. They don't like ecommerce and the internet because it's cross-border trade that is difficult to regulate/track/tax. They are working on a variety of measures to interfere in it. It's not impossible for them to come up with an argument that ads from those advertisers based in the UK that appear on your site should be taxable. As you have no way of accounting for that they may fall back on expecting you to pay tax for those of your visitors who are EU based. The counter to that is, of course, that Adsense doesn't share earnings data on that micro level so you can't account for it. The natural argument from HMCE will then be to work on percentages i.e. 10% of your visitors are EU based, so 10% of your Adsense cheque is subject to VAT. There haven't been any test cases but I can assure you that HMCE aren't ignoring Adsense/affiliate earnings. And that they are talking with tax authorities from other countries in an attempt to seal deals that will force companies like Google to provide the micro data for tax purposes.

>>My accountants say no
I usually go with my accountant's advice over anything I read in forums.

[leveldisc]

"I usually go with my accountant's advice over anything I read in forums."

Absolutely.

[dregs33]

Hi

We don't pay VAT on our AdSense income.

I am interested in hearing how people handle the VAT on Adwords. At the moment we don't pay any but declare it as sales and purchases on the quartely VAT statement, in Box 6 and 7.

This seems to have satisfied Customs & Excise for the last 18 months.

dregs33

[Mauricio]

The UK VAT is the same VAT we all have here in the EU (IVA in Spain).
When you sell your advertising space to Google Inc. you're selling a product abroad and these operations are not under the VAT "domains". VAT is only for inner commerce.

[leveldisc]

Dregs,

We do the same. We have not claimed vat back from adwords purchases and likewise we have not refunded vat on adsense income. This seems to be the common consensus, but as Marco says it's the HMC&E opinion that counts.