View Full Version : VAT on Sales - what do you do????
Maybe this is a thread for the larger site owners on here, but I've got the VAT man sniffing around my business (again).... To date, I've kept my web business entirely seperate from my other business... and havent claimed VAT back nor declared any sales for VAT..... thinking I'm justified as my EU sales are below the VAT registration limit.
But now my EU sales are creeping towards the dreaded registration limit and I'm having to think about what to do concerning VAT.
There is a band of opinion that as my site is hosted in america and sales are made by ccBill (if u look at their phrasing they say profit on check look up) so we dont have to worry about it.
Theres other stories I've heard of UK site owners getting turned over by the VAT man.
My options are:
1. Do nothing and claim that sales are made from the USA, and I only get the profit from those.
2. Register for VAT and declare EU sales.
3. Move the whole thing offshore.
I just wondered what other site owners were doing.... If u dont want to post on line please feel free to email me at gawdi@fenmarketing.com
I've heard the VAT man can be more of a bugger than the tax man - if you have an accountant why not get their advice? If not look up Sandy Dear (she's posted here a couple of times) as she's an adult industry specialist accountant who'll be able to give you the right answers.
Sandy is 1 of my accountants......... who looks after adult side of business..... she suggests registering, but i'd be exempt.......... but I'm keen not to have 2 register in the first place....
I have had to be VAT registered for years and still am.
Firstly I'd like to point out that if you ask two different accountants this question, you will get two different answers and secondly Id like to point out if you ask to different VAT inspectors they will tell you two different answers. I know this from experiance and infact I changed my accountant to fit the answer I wanted.
The main point is as I understand it is the people billed are not you're customers. They are CCBill's customers. You only have one customer and that is CCBill. So it doesnt matter where the member is. It only matters where CCBill is.
Now this gets tricky as we now have CCBill EU. CCBill EU dont charge VAT and are only a subsidery of the US parent company who is US based and so dont need to. So your customer is CCBill in the states. If CCBill EU were the actual company then they would be charging VAT and you would also have to charge them VAT.
My options are:
1. Do nothing and claim that sales are made from the USA, and I only get the profit from those.
2. Register for VAT and declare EU sales.
3. Move the whole thing offshore.
You will need to register for VAT if your EU sales are going to go over the £58,000 limit.
Option 1 might work, but if the VAt people subsequently investigate and discover the truth, you're fucked.
Option 3 isn't an option unless you move yourself out of the EU as well. Even then, you're still supposed to register, but I have no idea how they would enforce that. I don't expect many people outside the EU bother.
I remember me and Craig having a massive debate over email about this. I think in the end all we agreed on was that two different accountants will indeed say two different things
The main point is as I understand it is the people billed are not you're customers. They are CCBill's customers. You only have one customer and that is CCBill. So it doesnt matter where the member is. It only matters where CCBill is.
Now this gets tricky as we now have CCBill EU. CCBill EU dont charge VAT and are only a subsidery of the US parent company who is US based and so dont need to. So your customer is CCBill in the states. If CCBill EU were the actual company then they would be charging VAT and you would also have to charge them VAT.
I strongly doubt that Customs would regard him as having just the one customer in CCBill. Customs have broad powers to 'cut to the chase' when looking at the nature of a transaction and the bottom line is that CCBill are nothing more than a third-party billing provider, facilitating a transaction between the site owner and subscriber.
Following on from that, it very much does matter where the member is located. The guidelines state that the point of sale for an Internet transaction is the location at which the services are 'enjoyed', not where the company providing the services or the billing provider are located.
cafeman
08-19-05, 03:10 PM
My understanding is similar to danbrusca's.
Here's a flow chart thingummy (http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_ShowContent&id=HMCE_CL_001727&propertyType=document)
Oh, and hi :)
Mattyboy
08-19-05, 03:11 PM
Following on from that, it very much does matter where the member is located. The guidelines state that the point of sale for an Internet transaction is the location at which the services are 'enjoyed', not where the company providing the services or the billing provider are located.
Thats exactly what the VAT inspector told me.
I strongly doubt that Customs would regard him as having just the one customer in CCBill. Customs have broad powers to 'cut to the chase' when looking at the nature of a transaction and the bottom line is that CCBill are nothing more than a third-party billing provider, facilitating a transaction between the site owner and subscriber.
Following on from that, it very much does matter where the member is located. The guidelines state that the point of sale for an Internet transaction is the location at which the services are 'enjoyed', not where the company providing the services or the billing provider are located.
Thats not what My accountant says and the VAT inspector has said thus far. Unless you have a merchant account and only use CCBill then you very much only have ccbill as a client. The members they have are their members not your,s and you are supplying a site to CCBill, to which they pay you. And so where the transaction was made makes no bearing to you as you are not selling to the member you are selling to CCBill, they are in turn selling to there own members
Shandy McAndy
08-20-05, 10:02 AM
I strongly doubt that Customs would regard him as having just the one customer in CCBill. Customs have broad powers to 'cut to the chase' when looking at the nature of a transaction and the bottom line is that CCBill are nothing more than a third-party billing provider, facilitating a transaction between the site owner and subscriber.
Following on from that, it very much does matter where the member is located. The guidelines state that the point of sale for an Internet transaction is the location at which the services are 'enjoyed', not where the company providing the services or the billing provider are located.
So if you are just an affiliate, who is your customer? CCBill, the affiliate program using CCBill or the customer at the point of sale?
Gets a bit messy when you start looking at it like that.
It's the affiliate program. They're paying you a commission on their sales. Simple.
Shandy McAndy
08-20-05, 12:23 PM
It's the affiliate program. They're paying you a commission on their sales. Simple.
So if the program owner is based in the UK you have to pay VAT on every cent that gets made regardless of where the sale has been made?
Also as an affiliate, you are an affiliate to CCBill not to the program owners unless they are using there own billing method, in the same way as a member is a member to ccbill not the paysite owner.
The thing thats being missed is that unless you have your own merchant account and are using a third party billing method, you dont have any customers, you dont bill anyone, you supply ccbill with a site of which they pay a commision on.
If you were to leave CCBill as you're biller you cant take you're customers with you. If you had you're own merchant account you could.
So if the program owner is based in the UK you have to pay VAT on every cent that gets made regardless of where the sale has been made?
The location of the subscriber would be irrelavant as the transaction is essentially between the program owner and the affiliate. As to whether or not VAT would be payable on the transaction commission, I'm not altogether sure. It's hard to tell where the service is being 'enjoyed'.
Also as an affiliate, you are an affiliate to CCBill not to the program owners unless they are using there own billing method, in the same way as a member is a member to ccbill not the paysite owner.
I don't see any basis for this at all.
Hmm this just gets harder and harder to work out!
I would say tho that the vat man is way way worse than then tax man and i mean wayyy worse. Do not fuck with these people as the powers they have are scarey.
domd
xx
They're as bad as eachother now that they've merged into HM Customs & Revenue :(
Hmmmmmmmm going around in circles........... think I'll just keep stum.........
Cardinal_Sin
08-25-05, 08:40 AM
You, are not selling anything - The processor does the selling and the contract is with the processor and the end customer. The processor then, in effect, gives you X% back in return for letting their customer use your secured members area.
Any vat on the sale will be down to the processor.
The only vat you have to get involved in is if your total net earnings are over the vat threashold
Gah, someone else perpetuating the myth that using a third-party processor gets you out of VAT.
The processor does not do the selling. All the processor does is handle the transaction between to the two parties - that's why they're called a 'third-party processor' - and (usually) provide subscriber management services. For this they charge a commission.
Consider the kind of wording processors use on their sites. It's usually along the lines of 'We'll charge a commission of 15% on your sales', not 'We'll pay you a commission of 85% on our sales'.
Cardinal_Sin
08-25-05, 09:49 AM
Gah, someone else perpetuating the myth that using a third-party processor gets you out of VAT.
The processor does not do the selling. All the processor does is handle the transaction between to the two parties - that's why they're called a 'third-party processor' - and (usually) provide subscriber management services. For this they charge a commission.
Consider the kind of wording processors use on their sites. It's usually along the lines of 'We'll charge a commission of 15% on your sales', not 'We'll pay you a commission of 85% on our sales'.
Sorry - But you are wrong over the memberships - The whole idea of e ticket sales now is responsibility towards Visa - Visa can not control millions of individual websites, so the onus is now on the e ticket provider.
Hence, The e ticket provider sells the subscription directly to the customer and is responsible for that customer -
Your deal with the eticket provider is to allow access for the e ticket's customer for a set % of the sale.
The whole 3rd party processor thing was dropped about three years ago over Visa's issues with the high c/b factor in the adult industry. E ticket providers are not 3rd party processors any longer.
Confuses the hell out of me. I shall just decline to pay the VAT man in the meantime. Will you all visit me in prison if I get it wrong? ;)
Cardinal_Sin
08-25-05, 10:30 AM
Confuses the hell out of me. I shall just decline to pay the VAT man in the meantime. Will you all visit me in prison if I get it wrong? ;)
If they put you in jail with a ball and chains, I will come and visit you - Take some pics and video to update your site for you! :) :)
RicardoB
08-25-05, 10:32 AM
I try to avoid it as much as possible by doingas many interantional transactions as I can, but on some occasions it can't be helped and I gotta pay it :D
Confuses the hell out of me. I shall just decline to pay the VAT man in the meantime. Will you all visit me in prison if I get it wrong? ;)
I can just see yopu now spanking the other inmates :)
Sorry - But you are wrong over the memberships - The whole idea of e ticket sales now is responsibility towards Visa - Visa can not control millions of individual websites, so the onus is now on the e ticket provider.
Hence, The e ticket provider sells the subscription directly to the customer and is responsible for that customer -
Your deal with the eticket provider is to allow access for the e ticket's customer for a set % of the sale.
The whole 3rd party processor thing was dropped about three years ago over Visa's issues with the high c/b factor in the adult industry. E ticket providers are not 3rd party processors any longer.
This has nothing to do with VAT.
Gah, someone else perpetuating the myth that using a third-party processor gets you out of VAT.
The processor does not do the selling. All the processor does is handle the transaction between to the two parties - that's why they're called a 'third-party processor' - and (usually) provide subscriber management services. For this they charge a commission.
Consider the kind of wording processors use on their sites. It's usually along the lines of 'We'll charge a commission of 15% on your sales', not 'We'll pay you a commission of 85% on our sales'.
Of course it is actually more complicated than already covered here, as each subscriber that fell under the net would also have to be issued with the relevant VAT receipt and that part of the transaction alone would be a logistical nightmare for site owners.
In our own case we have spoken with the VAT people (twice and with our accountants present) about this and in great detail and when they went over the nuts and bolts of the situation using US processors we were told that we don’t have an issue for them to deal with.
If the advice had been the other way and EU subscriptions would have been liable we would have taken the decision to move everything to our Nevada LLC or simply block surfers from EU countries from subscribing with us.
I am a pornographer not an unpaid tax collector.
Cardinal_Sin
08-25-05, 10:51 AM
This has nothing to do with VAT.
Can't put it any clearer for you -
I have never paid one penny on a membership transaction and have been doing this since 1996 - When I am in the country, I claim vat against all buisness related items - When I am out of the country, I don't. My last meeting with the vat man covered memberships and he said vat on memberships would be too difficult to contemplate implementing. He saw it the same way I explained it here -
Can't put it any clearer for you -
I have never paid one penny on a membership transaction and have been doing this since 1996 - When I am in the country, I claim vat against all buisness related items - When I am out of the country, I don't. My last meeting with the vat man covered memberships and he said vat on memberships would be too difficult to contemplate implementing. He saw it the same way I explained it here -
The is almost same advice as we got ourselves.
BritishTwinks
08-25-05, 11:27 AM
My accountant tells me to pay VAT on sales processed by NoChex and SMS, but not those processed by CCBill.
I do as I'm told because I'm a good boy.
This has nothing to do with VAT.
It has everything to do with VAT. If your customer is CCBill and there customer is the end user
My accountant tells me to pay VAT on sales processed by NoChex and SMS, but not those processed by CCBill.
I do as I'm told because I'm a good boy.
Me too, so I dont do any UK processors for that reason
It has everything to do with VAT. If your customer is CCBill and there customer is the end user
Bingo :)
Cardinal_Sin
08-25-05, 01:28 PM
British Twinks, Johnny Traffic, myself and SGS announce the opening of our new accountantcy service for the uk adult webmaster community -
We will only charge you 35% of your gross take and for this, we guarantee to save you from charging vat on memberships.
What a great deal, folks - Sign up below :angel:
British Twinks, Johnny Traffic, myself and SGS announce the opening of our new accountantcy service for the uk adult webmaster community -
But you might want to stock up on some lube incase we are wrong :drink:
BritishTwinks
08-25-05, 01:36 PM
hahaha
I quite like my current accountant thanks! :)
Cardinal_Sin
08-25-05, 01:41 PM
But you might want to stock up on some lube incase we are wrong :drink:
Na - That is why I though British Twinks would be a useful partner to have around!
British Twinks, Johnny Traffic, myself and SGS announce the opening of our new accountantcy service for the uk adult webmaster community -
We will only charge you 35% of your gross take and for this, we guarantee to save you from charging vat on memberships.
Problem solved then...:-)
But U've created a new problem..... what make of lube to stock up on for when the boys in blue lock me up.... I personally favour liquid silk, because it tastes like shit... thus discouraging oral sex.... but there again in this context it might encourage oral sex.....
hmmmmmmmm problems problems problems...................
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