UK VAT Refund Update?

[kmander]

I am no longer being charged VAT by Google and see refunds (Billing Summary) for un-invoiced VAT assessments made in July.

However, I have seen or heard nothing regarding the VAT payments made on invoices prior to the update.

Does anyone have any news?

[Paul_N]

I emailed support about this and they told me there's a delay due to shear number of refunds. However, they also told me I should expect an email concerning the refund within the coming weeks. That was just over 1 week ago.

[kmander]

Yay, I have news! Today I briefly spoke to a very nice Irish lass who informed me that progress was being made. Their intentions were apparently to make the refunds by the end of this month, but recent delays extend this by a week or so.

[cleverzman]

I've had correspondence too same thing delay due to number of refunds etc. etc. nothing to do with the fact the longer they hold onto the money the more interest it accumulates...do you think Google will be adding interest to the refund or pocketing it for themselves? :-)

[Kiter]

Can anyone confirm how far back Google are going to go in refunding VAT charged, i.e. am I going to get VAT refunded to me that was charged on my account in November 2004?

[traderman]

The VAT refund applies from when Google first started charging VAT at the Irish rate - from memory (but don't quote me) this was in Jan 2004.

[shorebreak]

Can someone explain this to me? Why is Google refunding VAT?

[traderman]

Quite simply because they shouldn't have been charging it in the first place. For some reason 'someone' decided that when Google moved it's European Adwords customers to be handled from their Irish office that all customers should be charged VAT at the Irish rate regardless of their actual location. Turns out that they should never have done this and customers should be declaring their Adwords spend locally and accounting for the VAT themselves at their local rate.

Given that Irish VAT was charged from over a year ago and at 21%, there are many, many people that are now due refunds running into thousands, even tens of thousands of dollars.

Technically everyone receiving a refund should then declare their spend and pay the correct VAT but I would expect many people to conveniently forget to do this and just spend the refund on something a bit more exciting ;-)

[Kiter]

Technically everyone receiving a refund should then declare their spend and pay the correct VAT

I don't think that is correct: whether you are VAT registered in the UK or not, if an organisation from outside the UK does not charge you VAT on a product or service, there is no obligation (or indeed mechanism) to pay Customs and Excise any VAT you have not been charged. I checked this with my accountant. Its ours to keep!

[traderman]

Mmm, I am not so sure...

For example, let's say I purchase a camera from a US seller. They don't charge me VAT but when it enters the UK I am liable for VAT at the standard rate.

Obviously Adwords are slightly different as the 'product' is intangible but I think this might be one of those 'grey areas'. Certainly Google were of the opinion that local VAT should be paid - mind you, what do they know, they have been charging incorrectly for almost two years :-)

I may be wrong and either way, I won't be offering my refund on a plate to C&E - if they want it, they can come and find me :-)

[chrisk999]

Are there any official Google pages about this rebate anywhere? (or an email from Google?)

I was charged VAT during July - October 2003, and it'd be brilliant to get this back now.

[traderman]

To my knowledge Google haven't posted anything on a web page - all affected advertisers were emailed back in July 2005.

It is only VAT charged at the Irish rate of 21% that will be refunded and I believe that this was only charged from Jan 2004. This being the case, I am afraid you won't be getting back the VAT you paid in 2003.

[shorebreak]

Traderman, thank you for the explanation, but I'm still not 100% sure of what this means. I understand from your description that Google was witholding 21% VAT, but does this mean that an Adwords advertiser who spend US$50000 during that period was charged an additional US$10500? If so, does Google now need to refund all US$10500, or merely the difference between the 21% Irish rate and lower rates in other European countries?

What I'm trying to understand is
a)what % of UK advertisers' spend since 1/2004 is going to be refunded by Google; and
b)what % of UK advertisers wil get the refund

Any help is greatly appreciated.

-Shorebreak

[traderman]

Google are refunding all of the VAT that they have charged at the Irish rate of 21% - not just the difference between the Irish rate and your local rate.

If you are a UK VAT registered business and have always self-assessed for VAT on your Adwords expenditure (ie. haven't ever paid VAT on your ad costs), this won't affect you as there is nothing to refund.

If you have not self-assessed and have paid VAT at the Irish rate then you should receive a refund.

All affected advertisers were emailed back in July but if you wanted to check whether you are affected or not just drop Google an email....

[partnermine]

Google told me by email this morning:

In response to your query I have contacted our Payments team on your behalf and they have informed me that there is currently a delay in the processing and issuing of these cheques. Unfortunately this delay is out of our control and we are currently working with our tax advisor's in order to process all the VAT refund cheques as quickly as possible.

I apologise for this inconvenience and I assure you that you will receive your cheque in the coming weeks as soon as this delay has passed.

Thank you for your patience and understanding with this issue.

Not totally satisfactory, but all we have. The challenge is thatit was not lawful for themto charge this money in the first place. However those who are saying "Google is gettingthe interest in this money and I want it" are unlikey to be right. The money is likely to be with the Irish VAT people where it has been sent incorrectly. Doubtless Google is trying to sort out with them why it levied it in the first place and why it rendered it to them. It is quite a major misundertanding of the VAT system, and was not hard to get right in the first place.

Note that my understanding is that only businesses who are not themselves VAT registered will receive a refund, and that they wil onoy do so if they have followed the instructions in Google's email (or ask support again what they must do).

[cleverzman]

If Ireland regulations are the same as UK, then Google have to do a VAT return every 3 months. So any money collected in month 1, 2, and 3 sits in Google's bank account until they do a return and pay the VAT man. If I was a company that spend tens or even hundreds of thousands with Google, I would right be asking where the interest on this money has gone in addition to the fact that it has been 4 months since this blew up it seems nobody has received a refund yet.