Lead Generation Company - How to account for Adwords Reverse Charge VAT?

[BLyle]

Appreciate any help anyone can provide!

We are an advertising company that primarily generate mortgage leads. We pay for most of our advertising through Google Adwords, who are based in Ireland and “Reverse Charge” VAT to us. Apparently with this we put the amount of VAT into both the input and output sections so that it zeros out the reverse charge. The issue is that we then charge our clients 20% VAT for our mortgage leads, and we then pay that 20% VAT to the HMRC... So we get double charged on VAT because we can’t reclaim that VAT from our advertising cost because we’ve already reclaimed it from the reverse charge!


Or am I getting it wrong and actually the 20% we charge clients, is the VAT that we’re reclaiming from the Reverse Charge? And that’s how it zeros out?

Thanks in advance for any help!

 

[UKSBD]

you're not paying the VAT you are charging your clients, they are, you're just collecting it.
They should then claim it back.

 

[BLyle]

you're not paying the VAT you are charging your clients, they are, you're just collecting it.
They should then claim it back.

Yes, sorry I probably didn’t make that too clear.

The VAT that we charge clients, we’re collecting for the HMRC, correct? We then “pay”/give HMRC all of that VAT money

 

[Scalloway]

The VAT that we charge clients, we’re collecting for the HMRC, correct? We then “pay”/give HMRC all of that VAT money

Yes. You should also be reclaiming VAT on goods and services you pay for. Your customers will be doing the same.

 

[BLyle]

Yes. You should also be reclaiming VAT on goods and services you pay for. Your customers will be doing the same.

Hi Scalloway, appreciate the reply.

So basically, yes we are doing exactly that. However our issue seems to be:

Adwords Reverse Charge us VAT on the advertising costs - which if they just charged regular VAT, we’d be able to reclaim against.

 

[UKSBD]

Adwords Reverse Charge us VAT on the advertising costs - which if they just charged regular VAT, we’d be able to reclaim against.

With Reverse Charge they don't actually charge you any VAT so there is none to reclaim.

It's just paperwork, you have to calculate what the VAT would have been and then *on paper* reclaim it.

No money actually changes hands, it's just the paperwork

Edit to add: What accounts software do you use? Most will just do it for you automatically provided you set up Google as being in Ireland.

 

[BLyle]

With Reverse Charge they don't actually charge you any VAT so there is none to reclaim.

It's just paperwork, you have to calculate what the VAT would have been and then *on paper* reclaim it.

No money actually changes hands, it's just the paperwork

Edit to add: What accounts software do you use? Most will just do it for you automatically provided you set up Google as being in Ireland.

Thanks for the reply!

We currently don’t use any accounts software! Recommendation??

 

[UKSBD]

Thanks for the reply!

We currently don’t use any accounts software! Recommendation??

I use Kashflow, their not averse to increasing prices though and some would say are expensive now.

It's what my accountants use though so that makes things simpler.

They also provide a 14 day free trial https://www.kashflow.com/pricing/

 

[blueprinthub.co.uk]

Thanks for the reply!

We currently don’t use any accounts software! Recommendation??

I posted a thread recently offering free QuickBooks Online software in light of the upcoming Making Tax Digital' changes.

 

[BLyle]

I use Kashflow, their not averse to increasing prices though and some would say are expensive now.

It's what my accountants use though so that makes things simpler.

They also provide a 14 day free trial

I’m happy to pay the premium if it calculates the google reverse charging! Can you confirm it does?

 

[BLyle]

I posted a thread recently offering free QuickBooks Online software in light of the upcoming Making Tax Digital' changes.

Hi there, from the looks of Quickbooks it’s the Essentials and above packages that deal with VAT? On your thread it says about the Self Employed package

 

[UKSBD]

I’m happy to pay the premium if it calculates the google reverse charging! Can you confirm it does?

As long as you set them up correctly.

You have to add them as a supplier, add their VAT number, tick a box where it says *This supplier is VAT registered in another EC Member State* Kashflow then does everything for you.

When you run a VAT report it tells you what to add in each box (this will be done automatically soon)

It also tells you what to put in your EC Sales list (if you sell anything in EU)

I would advise you speak to your accountant 1st, makes far more sense to use the same system that they use (or one they are familiar with).

Edit to add: Here is an article from Kashflow regarding Making Tax Digital and VAT submissions - https://www.kashflow.com/blog/making-tax-digital-and-additional-vat-functionality-update

 

[blueprinthub.co.uk]

Hi there, from the looks of Quickbooks it’s the Essentials and above packages that deal with VAT? On your thread it says about the Self Employed package

No, it says about QuickBooks Online and QuickBooks self employed.

The QuickBooks Online will be the top version - called 'Plus'.

 

[BLyle]

No, it says about QuickBooks Online and QuickBooks self employed.

The QuickBooks Online will be the top version - called 'Plus'.

Ok... well stupidly I’ve gone ahead and bought the Essentials version.

Any chance I can switch easy?

 

[blueprinthub.co.uk]

Ok... well stupidly I’ve gone ahead and bought the Essentials version.

Any chance I can switch easy?

Yes, I'll contact them tomorrow for you.
Would you like to change to QuickBooks Online Plus under my account, so you don't have to pay, or would you simply like to change from Essentials to Plus and pay for it yourself?

I'll need your business name (as displayed on QuickBooks) and your QuickBooks account number (Company ID).
To get this, follow the instructions on this page:

https://quickbooks.intuit.com/community/Getting-Started/How-do-I-find-my-Company-ID/td-p/185551

Keep this information private and don't post in the forum.
You can either PM me or email me at
[email protected]

Jeremy