HELP.. Domain Name VAT status

Discussion in 'Accounts & Finance' started by Lorraine Meadowcroft, Jun 14, 2018.

  1. Lorraine Meadowcroft

    Lorraine Meadowcroft UKBF Newcomer Free Member

    8 0
    Hi,

    I purchased a premium domain (not a website or a business, just a domain) and a number of other domains early last year 2017 for a 5 figure sum as a private individual. I became VAT registered in January 2018 as a sole trader.
    There seems to be some confusion as to whether domains are treated as a service or an intangible asset. If they are treated as a service I can now not claim the VAT back. How do I convince HMRC that I purchased domains as an asset?

    Thanks in advance
    Lorraine
     
    Posted: Jun 14, 2018 By: Lorraine Meadowcroft Member since: Jun 14, 2018
    #1
  2. Alan

    Alan UKBF Legend Full Member - Verified Business

    5,938 1,632
    When I bought a premium domain my accountant had no problems with it being an intangible asset.

    As it is a 5 figure sum, the vat would be a 4 figure sum, so worth paying for professional advice I would have thought.
     
    Posted: Jun 14, 2018 By: Alan Member since: Aug 16, 2011
    #2
  3. Paul Norman

    Paul Norman UKBF Ace Free Member

    2,298 671
    First, buying a domain would be an asset, not a service.

    Secondly, check that you have a VAT invoice, showing the VAT that you paid.

    Third, to be doubly sure, check with your accountant.
     
    Posted: Jun 14, 2018 By: Paul Norman Member since: Apr 8, 2010
    #3
  4. Lorraine Meadowcroft

    Lorraine Meadowcroft UKBF Newcomer Free Member

    8 0
    Yes, the VAT is substantial, my accountant says I can't claim as it's classed as a service but from what I've seen, if it's a premium domain then it can be classed as an asset. HMRC after alot of deliberation and people who weren't very sure said it was a service!
     
    Posted: Jun 14, 2018 By: Lorraine Meadowcroft Member since: Jun 14, 2018
    #4
  5. Lorraine Meadowcroft

    Lorraine Meadowcroft UKBF Newcomer Free Member

    8 0
    HMRC say not, other advice online seems to think it is. I have a VAT invoice thanks
     
    Posted: Jun 14, 2018 By: Lorraine Meadowcroft Member since: Jun 14, 2018
    #5
  6. Nathanto

    Nathanto UKBF Newcomer Free Member

    154 21
    For me, the very fact that you paid a five figure sum would confirm that the domain is an asset.

    If it's a .uk domain and it's not already registered for the maximum 10 years then for a belt and braces approach (and the relatively small cost involved) I would renew the domain for the full 10 year period as further proof it's an asset (and as a safeguard against forgetting to renew it each year!)
     
    Posted: Jun 14, 2018 By: Nathanto Member since: Mar 18, 2009
    #6
  7. Lorraine Meadowcroft

    Lorraine Meadowcroft UKBF Newcomer Free Member

    8 0
    Yes, that's what I thought, I was also when funds permitted going to register it for 100 years but may take your advice now and register it for another 10 years. It's a .com
     
    Posted: Jun 14, 2018 By: Lorraine Meadowcroft Member since: Jun 14, 2018
    #7
  8. Lorraine Meadowcroft

    Lorraine Meadowcroft UKBF Newcomer Free Member

    8 0
     
    Posted: Jun 14, 2018 By: Lorraine Meadowcroft Member since: Jun 14, 2018
    #8
  9. Alan

    Alan UKBF Legend Full Member - Verified Business

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    unfortunately the maximum is 10 years
     
    Posted: Jun 14, 2018 By: Alan Member since: Aug 16, 2011
    #9
  10. Lorraine Meadowcroft

    Lorraine Meadowcroft UKBF Newcomer Free Member

    8 0
    Network solutions offered me 100 years..
     
    Posted: Jun 14, 2018 By: Lorraine Meadowcroft Member since: Jun 14, 2018
    #10
  11. Nathanto

    Nathanto UKBF Newcomer Free Member

    154 21
    Network Solutions are being a little disingenuous...

    The maximum a domain can be renewed for is 10 years, all that Network Solutions do is renew it for 10 years and then 10 years later renew it for another 10 years etc. Importantly for you, the authoritative WHOIS report would only ever show a maximum renewal of 10 years and so for your purposes there's little point in renewing for longer.
     
    Posted: Jun 14, 2018 By: Nathanto Member since: Mar 18, 2009
    #11
  12. consultant

    consultant I Can Help Your Business Staff Member

    5,302 738
    Were you charged VAT i.e. have a VAT invoice from a VAT registered business?

    If yes, why couldn't you claim back VAT (assuming you are VAT registered)?
     
    Posted: Jun 14, 2018 By: consultant Member since: Jan 21, 2008
    #12
  13. Lorraine Meadowcroft

    Lorraine Meadowcroft UKBF Newcomer Free Member

    8 0
    Thanks for that, helpful information
     
    Posted: Jun 15, 2018 By: Lorraine Meadowcroft Member since: Jun 14, 2018
    #13
  14. DontAsk

    DontAsk UKBF Enthusiast Free Member

    901 118
    Perhaps they are confused between buying the domain and buying hosting for that domain
     
    Posted: Jun 15, 2018 By: DontAsk Member since: Jan 7, 2015
    #14
  15. Alan

    Alan UKBF Legend Full Member - Verified Business

    5,938 1,632
    What great business model.

    I think I'll start offing 999year domain renewal to premium domain holder, lets for just £2,000.
    I'd only need 2,000 mugs = £4,000,000 and just fold the company and retire.
     
    Posted: Jun 15, 2018 By: Alan Member since: Aug 16, 2011
    #15
  16. spidersong

    spidersong UKBF Newcomer Free Member

    194 93
    Unfortunately VAT law doesn't care whether it's an 'asset' or not, it cares whether it's goods or services, and it defines anything that isn't goods as services (VAT Act 1994 S5 (2)).

    A domain name is not goods. You do not have a physical domain you can pick up and put in a bag, you have pointers on various peoples servers that point to your IP address when people type in your domain, and that may well be a very good, albeit intangible asset, but I'm afraid it's not goods.

    All this is is those people providing a service of pointing to the right place and the right to keep pointing to the right place, I'm afraid just because something is a service doesn't stop it being an asset.

    So your accountant's right unless you only purchased it in the six months before you registered for VAT (VAT Regulations 1995 S111) then you can't claim the VAT back.
     
    Posted: Jun 18, 2018 By: spidersong Member since: Aug 20, 2008
    #16
  17. lesvatadvice

    lesvatadvice UKBF Regular Free Member

    669 105
    Have you asked HMRC whether you can move your date of registration back? I cannot guarantee that they will, but got to be worth a letter!
     
    Posted: Jun 18, 2018 By: lesvatadvice Member since: Jul 7, 2011
    #17
  18. Nathanto

    Nathanto UKBF Newcomer Free Member

    154 21
    Does HMRC define "goods" anywhere?

    You cannot pick up "power, heat, refrigeration or ventilation" and put them in a bag but Schedule 4 of the VAT Act seems to suggest they are "goods" for the purposes of VAT.
     
    Posted: Jun 19, 2018 By: Nathanto Member since: Mar 18, 2009
    #18
  19. Scalloway

    Scalloway UKBF Legend Free Member

    13,673 2,941
    https://www.gov.uk/guidance/vat-guide-notice-700#section4

     
    Posted: Jun 19, 2018 By: Scalloway Member since: Jun 6, 2010
    #19