- Original Poster
- #1
Hi there,
I have an online personal training company that is fully registered as a UK LTD Business, that is also registered for VAT (has to be, due to turnover being above the threshold).
I started it up August 2017 without registering for VAT (because I was unsure at first how much I was going to make) until I went above the threshold (which I think was around say March 2018 time).
I asked my accountant what the situation was with regards to VAT on digital services/products, when I was sending them to outside of EU and he told me that I should be charging everyone, globally (whether it was B2C or B2B) VAT - which is what I have been doing since.
Around 90% of my income is from America and Canada - but from the research I have done, it seems like I shouldnt be having to pay VAT to anyone outside of the EU for digital services/products? Some of my clients were adament that I shouldn't be doing so.
The problem is, say I charge a client (For maths sake) £100 (before I registered for VAT) - since registering , I'd need need to now charge them £120 - but because my rates are higher than this and because more often than not im selling directly to consumers, they cant reclaim the VAT and they are definitely not happy at paying an extra 20% for the sake of it. So now I am charging the original £100 to keep them as customers, but Im having to fork out 20% of my profit margins onto VAT. So whereas before I'd earn £100, now I'm earning £80 for the exact same thing.
My income avenues are
1) eCommerce website hosted on shopify. (I can set up individual taxes for different countries and issue tax reports from here, but I havent done it - as I've been following my accountants advice on globally charging B2B/B2C 20% VAT - although I dont display 20% VAT on my website, because it was putting so many people off...(!)
Now with Shopify, I have global clients - pretty much all of Europe, Australia, South America, North America and a few Asian countries - as well as the Middle East. But Shopify (I think) pays me via Stripe out of a UK registered business. So do I break down each client and charge them all seperately via the Individual Location Taxes on Shopify? Or does it all count as UK business paying me (shopify)
I might be wrong, where I am charging everyone globally 20% - I think I should be charging Outside of EU countries 0% - and then adding individual taxes for each european country?
What I'm selling on this website, is Skype consultations, ebooks (PDFs), training programs etc - all digital, nothing physical.
2) Pre-recorded videos (workout videos, demonstrations etc..) - these are all sold via a 3rd party website. I upload the videos, the website hosts them / manages them / is responsible for emailing the videos automatically to the client. ALL the websites I use to sell videos are US based businesses..
3) Monthly subscription service via OnlyFans. (This is where it gets interesting....)
Similiar to above, OnlyFans (Fenix International Ltd) issues the payments each month in USD ($) and I believe it is sent from their US Bank Account. I dont get a breakdown from them each month and I've never heard/seen them mention anything to do with VAT and whether or not they are including it or excluding it?
One could argue that if you have 1,000 subscribers paying you $9/month ($9000 PCM) that I should charge individually based on every subscribers location - but this is impossible to see on their platform, due to all subscribers being completely anonymous (unless they choose otherwise)
This would make me think that I should just treat OnlyFans as a US source of Income as a whole. Afterall - the customers are paying OnlyFans (who are taking a 20% Cut for their business model) and then giving me 80%. The custmers aren't paying me directly. I am supplying content to OnlyFans, who are selling it (with the help of my marketing/advertising) and then giving me an 80% cut of what they make from it.
OnlyFans pay me in USD each month and my HSBC Business Account converts this into GBP. There is no mention of VAT on this.
I've heard there is a MOSS Scheme too, but not sure if that would be suitable for me?
Currently paying ~£2.5K/Month on VAT, but I expect this to increase quite a bit more, due to business expansion/opening up new avenues. I also have barely any business expenses (I only managed to reclaim £120 of VAT in the last quarter... My business is almost 100% profit, as I am selling my time/services/virtual products.
Thanks in advance!
TL;DNR
1) Should I be charging clients (b2b+b2c) outside of the EU VAT on Digital Services/Sales.
2) If I shouldnt have been, when my accountant told me I should have been - Is it possible to add it up retrospectively and issue a VAT Rebate for all the unneccessary VAT that I paid (I estimate this to be around £60-80K, if so)
3) Going forwards, what should I do with shopify? Add up individual country taxes and issue outside of EU 0% VAT, but then collect tax at 20% on all UK + EU orders?
I have an online personal training company that is fully registered as a UK LTD Business, that is also registered for VAT (has to be, due to turnover being above the threshold).
I started it up August 2017 without registering for VAT (because I was unsure at first how much I was going to make) until I went above the threshold (which I think was around say March 2018 time).
I asked my accountant what the situation was with regards to VAT on digital services/products, when I was sending them to outside of EU and he told me that I should be charging everyone, globally (whether it was B2C or B2B) VAT - which is what I have been doing since.
Around 90% of my income is from America and Canada - but from the research I have done, it seems like I shouldnt be having to pay VAT to anyone outside of the EU for digital services/products? Some of my clients were adament that I shouldn't be doing so.
The problem is, say I charge a client (For maths sake) £100 (before I registered for VAT) - since registering , I'd need need to now charge them £120 - but because my rates are higher than this and because more often than not im selling directly to consumers, they cant reclaim the VAT and they are definitely not happy at paying an extra 20% for the sake of it. So now I am charging the original £100 to keep them as customers, but Im having to fork out 20% of my profit margins onto VAT. So whereas before I'd earn £100, now I'm earning £80 for the exact same thing.
My income avenues are
1) eCommerce website hosted on shopify. (I can set up individual taxes for different countries and issue tax reports from here, but I havent done it - as I've been following my accountants advice on globally charging B2B/B2C 20% VAT - although I dont display 20% VAT on my website, because it was putting so many people off...(!)
Now with Shopify, I have global clients - pretty much all of Europe, Australia, South America, North America and a few Asian countries - as well as the Middle East. But Shopify (I think) pays me via Stripe out of a UK registered business. So do I break down each client and charge them all seperately via the Individual Location Taxes on Shopify? Or does it all count as UK business paying me (shopify)
I might be wrong, where I am charging everyone globally 20% - I think I should be charging Outside of EU countries 0% - and then adding individual taxes for each european country?
What I'm selling on this website, is Skype consultations, ebooks (PDFs), training programs etc - all digital, nothing physical.
2) Pre-recorded videos (workout videos, demonstrations etc..) - these are all sold via a 3rd party website. I upload the videos, the website hosts them / manages them / is responsible for emailing the videos automatically to the client. ALL the websites I use to sell videos are US based businesses..
3) Monthly subscription service via OnlyFans. (This is where it gets interesting....)
Similiar to above, OnlyFans (Fenix International Ltd) issues the payments each month in USD ($) and I believe it is sent from their US Bank Account. I dont get a breakdown from them each month and I've never heard/seen them mention anything to do with VAT and whether or not they are including it or excluding it?
One could argue that if you have 1,000 subscribers paying you $9/month ($9000 PCM) that I should charge individually based on every subscribers location - but this is impossible to see on their platform, due to all subscribers being completely anonymous (unless they choose otherwise)
This would make me think that I should just treat OnlyFans as a US source of Income as a whole. Afterall - the customers are paying OnlyFans (who are taking a 20% Cut for their business model) and then giving me 80%. The custmers aren't paying me directly. I am supplying content to OnlyFans, who are selling it (with the help of my marketing/advertising) and then giving me an 80% cut of what they make from it.
OnlyFans pay me in USD each month and my HSBC Business Account converts this into GBP. There is no mention of VAT on this.
I've heard there is a MOSS Scheme too, but not sure if that would be suitable for me?
Currently paying ~£2.5K/Month on VAT, but I expect this to increase quite a bit more, due to business expansion/opening up new avenues. I also have barely any business expenses (I only managed to reclaim £120 of VAT in the last quarter... My business is almost 100% profit, as I am selling my time/services/virtual products.
Thanks in advance!
TL;DNR
1) Should I be charging clients (b2b+b2c) outside of the EU VAT on Digital Services/Sales.
2) If I shouldnt have been, when my accountant told me I should have been - Is it possible to add it up retrospectively and issue a VAT Rebate for all the unneccessary VAT that I paid (I estimate this to be around £60-80K, if so)
3) Going forwards, what should I do with shopify? Add up individual country taxes and issue outside of EU 0% VAT, but then collect tax at 20% on all UK + EU orders?
