UK VAT threshold and PayPal subscriptions?

What happens if you hit 60k+?

[Wi11]

I have a number of incoming PayPal subscriptions, at lets say £10 a month.

If I ever need to register for VAT (here's hoping), and setup VAT in my PayPal account, does anyone know what will happen to these regular £10 payments?

Will the subscription automatically change for the customers to £8.25 + 17.5% vat, or will the £10 payment become £10 + 17.5% and suddenly the customers will be charged £11.75 each month?

Or will I need to ask them to cancel all their subscriptions and start new ones? I thought here might be a better place to ask than notoriously slow PayPal support.

[Frank_Rizzo]

You should register for VAT if your turnover in the next 12 months is likely to exceed £60,000 (or whatever it is these days).

If you do hit that figure and you have to register you have a choice.

a) Keep the payments from customers at £10 but you give HMCE £1.50 and end up with £8.50 yourself
b) Increase the payments to your customers to £11.75. You keep the £10 and give HMCE £1.75

In both cases you will be able to claim back VATable costs such as server hosting, advertising fees, accounting fees etc.

The vat charges will be from the day you are registered (you get a certificate) so you don't need to back charge your customers. Although you can claim back VAT you have paid on purchases for a few months.

[edited by: Frank_Rizzo at 4:46 pm (utc) on Aug. 22, 2006]