Article 196, Council Directive 2006/112/EC

[phil - rentIN Bansko]

Dear All (and hopefully Kevin Hall)

I was searching on the above and came across this 2008 thread number 82737 on the subject - where Kevin says -

"HMRC's stated test is merely that the customer merely be "in business" (and using the services for their business), with the leading proof of this being the customer's VAT registration number. And who would buy advertising services unless they are "in business" (is a possible rationale that Adwords might have adopted)."

I am currently VAT registered and using google adwords. I am considering de-registering for VAT as we trade under the threshold. Currently I am not charged VAT on my invoices from Google and am registered with Google as having an account for business purposes.

My questions are -

1. Is this still this still the case and, if so, does this mean that Google (and Facebook) will not charge me VAT on their invoices if I de-register.

2. How do I account for this VAT if not registered.

Thanks in advance to anyone for their assistance

Regards
Phil Grimes

[Kevin Hall]

Hi Phil

Yes, I'm still alive! This is where legal requirements and real-world practice might collide.

In short, yes it's still the case.

In law, advertising services are still Reverse Charged to businesses in different countries. The test of whether you are a "business" is whether you are a "taxable person" (not necessarily a company/individual registerd for VAT, but one who could be registered for VAT, or is at least carrying out an "economic activity" ... which means not simply holding assets, but trading goods or supplying services).

But in practice, suppliers have frequently got it in their heads that they must have the customer's VAT registration numbers in order to record the sales in their new EC Sales Lists for services. But it is not the case in law, so you might have to argue with them and show them VAT legislation to convince their VAT department otherwise. Though I must admit, I am not familiar with how accurate Facebook/Google Adwords are on this issue - hopefully they are more aware than most and will get it right!

In summary, if you are not VAT registered, but you are still in business, the supplier should charge you no VAT at all. You should add these "Reverse Charged" purchases to your UK sales totals to see whether (in any rolling 12-month period) you have exceeded the UK VAT registration threshold and must re-register for UK VAT. If you are still under the threshold, you can remain unregistered and no VAT is ever accounted for on the transaction!

Hope that helps?

[phil - rentIN Bansko]

Hi Kevin,

First of all, pleased to hear you are still alive . I understand what you are saying and it is extremely helpful. Based on your comments I have sent an e-mail to google adwords to seek their confirmation that I will not be charged VAT on invoices issued once I am de-registered.

Assuming I receive a reply I will post on here to try and assist others, many of whom I assume are in a similar position.

Thanks once again.

[phil - rentIN Bansko]

Dear All

This is my reply from Google

"I have reviewed your account and see that the account has always been used for business purposes and since you use AdWords for business purposes, you have set the same in the Billing Preference page. Please be assured that since you use AdWords for business, we do not charge you VAT, and if this setting on the Billing preference page stays the same, you will not be charged VAT

Further, I checked the Billing preference page, and see that you haven't updated the VAT information for this account, therefore it wouldn't appear on invoices. Rest assured that, if the account continues to be used for business, you will not be charged VAT. I hope that clarifies your concern".

So all good then, thanks to Kevin for your help and I hope this benefits others.

Regards