Google Adwords VAT as of 1st January 2010 for sole trader

[freelancer500]

Hi,

I see the information below from an email from Google:

"As and from the 1st of January 2010, EU Vat Regulations are changing. This
change requires us to have a VAT number for you in your account."

I am spending with Adwords for some clients. As a sole trader with no VAT registration, does anyone know what I should be doing? Will I be charged VAT from 2010? Do I have to get a VAT number? What are the implications of this? Do I charge this VAT on to the client?

Many thanks for your help.

[UKSBD]

If you never gave them a VAT number in the first place, you would have
been paying VAT already , it just isn't broken down on your statements.

Had you been VAT registered and told them, the VAT would have been
taken of prior to 1st January and they account for it.

From 1st of January (if VAT registered, and they know) the ammount you pay
will not have VAT on it, but you have to account for it.

As you are not VAT registered none of this applies to you.

If the companies you are doing AdWords for are VAT registered it means
you are costing them 17.5% more than they need to pay.

[Colin Parker]

You can't claim VAT on Google Adwords as an advertiser because Google operate from Southern Ireland. They do this to escape UK tax regulation.

If you do Adwords for clients it's up to you how you charge if you are VAT registered.

If the client pays for the Adwords advertising separately - no VAT is involved either way. The client would only pay VAT on the charge you levy for your services if you are VAT registered.

Alternatively if you lump both costs together you would have to add VAT if you are registered but if the client wasn't VAT registered they couldn't claim it back so effectively the client would be paying 17.5% more than is necessary.

In summary, if you are VAT registered and your client isn't - bill them for Adwords advertising and your management costs separately.

Colin Parkrt

[UKSBD]

You can't claim VAT on Google Adwords as an advertiser because Google operate from Southern Ireland. They do this to escape UK tax regulation.

If you do Adwords for clients it's up to you how you charge if you are VAT registered.

If the client pays for the Adwords advertising separately - no VAT is involved either way. The client would only pay VAT on the charge you levy for your services if you are VAT registered.

Alternatively if you lump both costs together you would have to add VAT if you are registered but if the client wasn't VAT registered they couldn't claim it back so effectively the client would be paying 17.5% more than is necessary.

In summary, if you are VAT registered and your client isn't - bill them for Adwords advertising and your management costs separately.

Colin Parkrt

Just because Google are in Ireland doesn't mean there is no VAT involved
a lot depends on how the OP set up his Adwords account.

If it was set up as a personal account he would have been paying
Irish VAT automatically (21%) and would not have been able to claim it back.

Where google makes things bad is they appear to automatically assume
that anyone using AdWords for business use is VAT registered.

[Colin Parker]

Just because Google are in Ireland doesn't mean there is no VAT involved
a lot depends on how the OP set up his Adwords account.

If it was set up as a personal account he would have been paying
Irish VAT automatically (21%) and would not have been able to claim it back.

Where google makes things bad is they appear to automatically assume
that anyone using AdWords for business use is VAT registered.

Can you explain exactly what you are saying.

Are you saying that UK businesses can claim VAT back on Google advertising if they are VAT registered? I have checked this previously with the Revenue and my accountant and been told that it's a no no.

If it can be claimed I've got one helluva claim!

Colin Parker

[UKSBD]

If you are VAT registered and have entered your VAT number in to your
Google account google will not have charged you VAT but you should
have self assesed.

If you didn't tell google your VAT number, google would have been
charging you Irish VAT (21%) which they will pay you back if you now
tell them you have always been VAT registered.

https://adwords.google.co.uk/support/aw/bin/answer.py?hl=en-uk&answer=6396

Like I said in previous post, it is bad, because google automatically
assume anyone using AdWords for businesee purposes is VAT registered
they also say anyone using Adwords for busineses is obliged to get a
VAT number, whether that is legal or not is another matter.

[Colin Parker]

If you are VAT registered and have entered your VAT number in to your
Google account google will not have charged you VAT but you should
have self assesed.

If you didn't tell google your VAT number, google would have been
charging you Irish VAT (21%) which they will pay you back if you now
tell them you have always been VAT registered.

https://adwords.google.co.uk/support/aw/bin/answer.py?hl=en-uk&answer=6396

Like I said in previous post, it is bad, because google automatically
assume anyone using AdWords for businesee purposes is VAT registered
they also say anyone using Adwords for busineses is obliged to get a
VAT number, whether that is legal or not is another matter.

I have read the Google advice page before - not understood it - rang the Revenue and they told me I'm not being charged VAT so I can't claim it.

You obviously know more than the guy I spoke to at the Revenue so can you tell me in plain language what my position is - I am VAT registered and Google have my VAT number.

Can I claim VAT?

Do purchases have to be declared on my VAT return?

What does 'self assessment' actually mean?

Thanks in advance,
Colin Parker

[UKSBD]

First you need to find out from google if they are charging you VAT (not
as easy as it sounds) if they have your VAT number they shouldn't be,
but best to check or it could be costing you a lot of money.

If not, when they send the bill you should calculate the VAT on it and
enter the figures in your VAT return, can't remember off hand, but think it
is boxes box 2 and 4.
It doesn't actually make a difference as they cancel each other out.

Where it gets tricky is if you're not VAT registered, you pay the VAT, but
can't claim it back.

This is why it is important for a VAT registered comany to use a VAT
registered Adwords campaign manager (unless they are using the
VAT registered businesses google account for billing)

[freelancer500]

Still a bit confused, Google don't make it easy :)

I am not VAT registered and do not have a VAT number and so I assume I will not be charged VAT and then I won't charge my clients VAT??? I have been in touch with my accountant and as far as I can tell the VAT issue does not apply as I am not VAT registered, although I need to clarify this.

:eek:

[UKSBD]

According to google you are obliged to obtain a VAT number if using
AdWords for business purposes, would like to here a legal opinion on this.

If not VAT regsistered, you may already be paying google VAT (at 21%)

Do you pay the Adwords bill, or do you just manage your clients google
accounts and they pay google direct?

[freelancer500]

For some clients they pay for the clicks and for others I charge it on to them. In the Google accounts that are for business purposes I cannot see a breakdown of VAT in the billing summary, so I don't know if I'm paying it or not?

[SussexHazel]

This is a complicated issue and one that many VAT registered businesses do not deal with correctly.

If you are in the UK, you're VAT Registered and you have provided your VAT number to Google Adwords, you will NOT be being charged VAT by Google. So there is nothing to claim back in terms of actual monetary movements.

HOWEVER, if you are using Google Adwords you MUST account for the transaction as a 'reverse charge' on your VAT Return.

[SussexHazel]

Here's how to apply the reverse charge:

Calculate 17.5% of Google payment and add this to Box 1 and Box 4

The net Google amount (amount paid) is added to Box 6 and Box 7

There is no overall effect on the amount of VAT paid as you add it to both input and output VAT via boxes 1 and 4

Hope this helps.