How to pay VAT if not registered?

[UKSBD]

How can a business pay the VAT when issued an invoice from outside the
UK if they are not VAT registered and the invoice has no VAT on it?

 

[Zeno]

I don't understand. Why would you think you had to pay VAT on this?

 

[drounding]

My understanding is that within the EU if you are not VAT registered then the supplier should include VAT in their invoice to you. You should tell them that you are not registered so that they can correctly invoice you. Many suppliers/manufacturers expect that their business to business customers are registered for VAT. Depending on your circumstances it may in fact be in your interest to be registered, if not only to give credibility to your suppliers.

 

[UKSBD]

Many suppliers/manufacturers expect that their business to business customers are registered for VAT. Depending on your circumstances it may in fact be in your interest to be registered, if not only to give credibility to your suppliers.

Thanks, I am registered, I am asking on behalf of someone who isn't

 

[UKSBD]

I don't understand. Why would you think you had to pay VAT on this?

Because it is a taxable supply to a taxable person.

 

[drounding]

Because it is a taxable supply to a taxable person.

Absolutely, which is why I think they should request an invoice from the supplier that includes VAT. There is no way of paying it independently of the invoice if they are not registered for VAT.

 

[UKSBD]

My understanding is that within the EU if you are not VAT registered then the supplier should include VAT in their invoice to you. You should tell them that you are not registered so that they can correctly invoice you.

They say that anyone using the service for business purposes are obligated to register for a VAT number, and therefore don't include the VAT

 

[drounding]

They say that anyone using the service for business purposes are obligated to register for a VAT number, and therefore don't include the VAT

I assume you are referring to the supplier rather than regulations. This is not uncommon as many suppliers expect their business customers are registered.

 

[UKSBD]

I assume you are referring to the supplier rather than regulations. This is not uncommon as many suppliers expect their business customers are registered.

Yes, but what if they aren't?
Can the supplier say they should have been, so it is their responsibility to deal with the VAT, and if so we get back to my original question, how can a business that isn't registered pay it?

 

[Zeno]

Yes, but what if they aren't?
Can the supplier say they should have been, so it is their responsibility to deal with the VAT, and if so we get back to my original question, how can a business that isn't registered pay it?

You can't but unless I am mistaken it is not your problem. The supplier has failed to meet the conditions required for zero rating the invoice.

 

[elaine@cheapaccounting]

The supplier can only not put vat on if he / she has a valid vat no.

If customer is not vat reg - then has to apply the vat.

The invoice should have vat on and they pay it like any other invoice with vat on if you are not registered for vat - or have I totally missed something?

 

[drounding]

That's correct the onus is on the supplier to correctly invoice the VAT. There is no provision for someone/company who is not registered for VAT to pay it. It has to be invoiced.

Tell the supplier that they are not registered it is up to them to correctly invoice regardless of whether they say the companies they sell to 'should' be registered. As I mentioned earlier though if this is to be a regular supplier then it may be in their interest to register otherwise the supplier may not accept future orders.

 

[elaine@cheapaccounting]

As I mentioned earlier though if this is to be a regular supplier then it may be in their interest to register otherwise the supplier may not accept future orders.

With respect - a supplier refusing to supply because someone is not vat registered is pretty limiting

Is this the tail waggling the dog

I have heard of such things but maybe in the case of very large companies.

 

[drounding]

With respect - a supplier refusing to supply because someone is not vat registered is pretty limiting ...

Agreed and they would perhaps loose some business, but I think it is business dependant. We've come across similar issues before with invoices from a supplier in Europe. They generally supply large concerns that would normally have to be registered and rarely (if ever it seems) deal with smaller companies that are not registered.

 

[UKSBD]

It's Google.
They state article 21.1(b) of the Sixth Directive as their reason.

It does say the supplier is jointly and severally liable though, but I assume that's why google say people using the service are obliged to register, to put the onus back on the person receiving the service.

 

[elaine@cheapaccounting]

Is this a reverse charge issue?

 

[UKSBD]

Is this a reverse charge issue?

If the business using the service is VAT registered, yes.
But Google appear to do it to all businesses, registered or not

 

[IanBrewster]

I have a non VAT registered business and use Google Adwords.

I just pay the invoice as presented. As previous posters have said, there is no mechanism for paying the VAT if your business is not registered.

For customers such as me, I believe that Google should charge VAT and account for it in Ireland.

 

[elaine@cheapaccounting]

If the business using the service is VAT registered, yes.
But Google appear to do it to all businesses, registered or not

Take it up with google

 

[UKSBD]

I have a non VAT registered business and use Google Adwords.

I just pay the invoice as presented. As previous posters have said, there is no mechanism for paying the VAT if your business is not registered.

For customers such as me, I believe that Google should charge VAT and account for it in Ireland.

Yes, but according to the sixth directive (or googles reading of it) you are
still liable for paying it. No idea how though or if they will ever come after you for it.

 

[UKSBD]

Take it up with google

I'm VAT registered anyway, so doesn't really effect me.
Was asking on behalf of someone else and also wondered if Googles interpretation of the sixth directive is right or not. If it is it will effect a lot of people, basically anyone using AdWords who isn't VAT registered.

 

[elaine@cheapaccounting]

I'm VAT registered anyway, so doesn't really effect me.
Was asking on behalf of someone else and also wondered if Googles interpretation of the sixth directive is right or not. If it is it will effect a lot of people, basically anyone using AdWords who isn't VAT registered.

Sorry I really think I am missing the point here ...

google aren't charging some thing when they should - result for customer

If they notice then they can charge the customer - OK bit annoying but should have paid it in the first place so no worse off

So what is the issue?

 

[UKSBD]

So what is the issue?

Article 21 of the sixth directive says the person receiving the service is liable for the VAT payment.

 

[drounding]

If you're registered for VAT you can just offset the amount but I can't see this ever holding ground against an individual/company that is not registered for VAT - there's just no method or provision for these sorts of payments.

Personally I'd just pay the invoice at it's face value and leave it at that - as I'm sure thousands of others do too.

 

[UKSBD]

Personally I'd just pay the invoice at it's face value and leave it at that - as I'm sure thousands of others do too.

Yes, but if you look at just how much money has been spent on Adwords over the years this could be a massive income generation for the govenment.

 

[KM-Tiger]

Yes, but if you look at just how much money has been spent on Adwords over the years this could be a massive income generation for the govenment.

The lion's share would have been spent by registered companies I would have thought. Of more concern to UK taxpayers is that Google pays virtually no CT in the UK. Some politician will twig that sooner or later. Bankers? Google makes them look amateurs.

I'm sure one could make out a cheque to G. Brown at 10, Downing St, SW1 and it would be gratefully received. Be quick though!

 

[UKSBD]

The lions share yes, but there must be an awful lot of people who aren't VAT registered who have used AdWords over the years.
Surely the government (UK or Ireland) will come after this money one day?

What would an accountants advice be to a non VAT registered person using AdWords? just carry on paying the bill and ignore the VAT and assume the problem will never arise?

 

[Zeno]

What would an accountants advice be to a non VAT registered person using AdWords? just carry on paying the bill and ignore the VAT and assume the problem will never arise?

I would inclined to advise to carry on with the status quo as I don't believe it to be your problem. It is actually Irish VAT being lost but I imagine that google has teams of lawyers, accountants& tax advisors (and failing that hookers & hitmen)to deal with it should it arise.

However, I understand that there is some degree of inter country co-operation between the European tax agencies (honour among thieves) however it is still ultimately google who are not meeting the required conditions of zero rating.