Do we need to register for VAT

[LAM]

Hi all,
Hoping someone can shed some light on my query as our accountant doesn't seem to know 100% and what they have explained just confuses me!

My partner is self employed, sole trader. His earnings for the past year have pushed him over the VAT threshold and so his accountant has said he needs to register for VAT.
However, my partners work doesn't involve him selling anything, so we're not sure what the VAT would be payable for. He makes videos online, and people can pay him if they like the video he makes (classed as a donation on the site they pay through) and he gets payment for allowing businesses to advertise in his videos.
Now, I know we are most likely wrong, but both of us thought that VAT was only applied to goods that are sold to the consumers - granted we don't know the full ins and outs, so we are happy to accept if we are wrong.

I'm asking here for help as the accountant has never dealt with a business like my partners before, so they are not 100% on the situation themselves.
Does he need to need to register for VAT? :-/
Any advice greatly appreciated. Thank you!

 

[Scalloway]

VAT is chargeable on services as well as goods. The end consumer pays the VAT as VAT registered businesses in the supply chain can reclaim VAT that is charged to them.

If I were a advising a business I would not recommend receiving donations as a means of avoiding VAT - everybody would be doing it if it was possible. VAT is chargeable on advertising.

 

[LAM]

Thank you for replying
Will get him registered then.

 

[TheCyclingProgrammer]

If you are legitimately receiving donations and not payment for the videos then I don't think they would count towards turnover for VAT purposes, only your advertising revenue.

If you d register for VAT and are charging VAT on the sale of your videos online then I'm afraid you're going to have to deal with the headache of VATMOSS if you sell to customers outside the UK.

 

[lesvatadvice]

Yes, he does have to be registered for VAT.
The donation issue can be a problem area. But if the "donation" is in return for something (a video), then it is a payment for services.
He should look at his Ts & Cs, especially with regard to VATMOSS, and see if there are ways to avoid this additional burden.
Are his customers in business or not? That will also have an impact if he is selling cross-border.

 

[TheCyclingProgrammer]

I think donation is the wrong word to use here. Maybe OP can clarify but I have seen websites that let you offer digital downloads to customers free of charge with a "tipping" system. Downloaders can leave a tip in return for the content but are not obliged to. IMO this would fal outside the scope of VAT as it is a gratuity not a payment for service.

 

[MyAccountantOnline]

...
My partner is self employed, sole trader. His earnings for the past year have pushed him over the VAT threshold and so his accountant has said he needs to register for VAT.
However, my partners work doesn't involve him selling anything, so we're not sure what the VAT would be payable for. He makes videos online, and people can pay him if they like the video he makes (classed as a donation on the site they pay through) and he gets payment for allowing businesses to advertise in his videos.
....
Does he need to need to register for VAT? :-/
.....

I think you need to get this confirmed by an accountant/tax specialist who has all of the relevant details and the necessary knowledge and skill to advise you. Getting it wrong could be an expensive mistake. If your accountant isnt willing/able to advise your partner ask him/her to recommend someone or ask if they have the ability to refer such a matter to a specialist.

 

[Gareth ACA Accountant]

I think you need to get this confirmed by an accountant/tax specialist who has all of the relevant details and the necessary knowledge and skill to advise you. Getting it wrong could be an expensive mistake. If your accountant isnt willing/able to advise your partner ask him/her to recommend someone or ask if they have the ability to refer such a matter to a specialist.

Nicola's advice is good. Its not hard for us to speculate with most of the facts but you really don't want to get this wrong.
Registering isn't likely to have a massive impact as advertising is a vatable supply and most advertisers are VAT registered - it won't matter if you have to add this on to your bill as the advertiser can reclaim this (I have made the very massive assumption that the advertising is the majority of the income, which may not be the case)

 

[Rickeo]

Can you drop me a PM with your husband/boyfriends details/website I'd be interested in his services.

 

[eastcoastbaby]

There are website where Youtube channel owners can create an account. If people like what the channel owner is producing they can make a donation to the channel. The people aren't paying for a good or service to be produced, nor are they paying to consume/watch it.

Sometimes in return for a donation the channel owner might send them a sticker, or something, adding to the complexity.

Patreon.com is one of those sites though it calls it "funding". but it seems that if the voluntary payment is a receipt of the trade then the case of CIR v Falkirk Ice Rink Ltd [1975] might apply. Now if others can watch the videos without making a donation, and it's freely available, then it's easy to argue that the payment isn't a receipt of trade as those making the donations aren't expecting anything in return.

Where your other half's activities are concerned, he sells advertising on the videos and these 'donations' supplement that advertising income. So would guess most likely be taxable as well as vatable.

I'm sure your accountant has all the details though so will be best placed to advise you or pass you on to someone who can.

As ever this is one where certain laws and rules are place, but not necessarily up to date to into account the latest developments in tech.

 

[Matthew Nathan Hargreaves]

Yes, as soon as any business goes over the VAT threshold then you do need to register for VAT. VAT is charged on all goods and services. Exemptions are children's clothes, books, newspapers, charity fundraising. There are many more, but can all be found on gov.uk