Website Ad Revenue apply to VAT?

[zlib]

Hi,

I am a sole trader, running an Internet business.

I run a large website which I am now earning anywhere from £3k to £6k per month in advertising revenues from advertising agencies.
Does this kind of income apply to VAT at all?

I'm not sure what kind of income it even applies to.

I'm not registered for VAT.

Any advice welcome

 

[Scott-Copywriter]

If you're under the VAT threshold for turnover then no. However once you reach it you have to register for VAT and according to this forum Ozzy charges VAT on Advertisement income so I assume the same applies for you.

 

[zlib]

Hmm, but its not like I can tell the ad company to send me an extra 17.5% to cover VAT.

These are earnings based on the views and clicks of the ads served. I'm not directly selling the space to the ad company.

 

[Scott-Copywriter]

Well then I'm really not sure but I'm still fairly confident VAT applies.

If you have broken the VAT threshold and you need to register then you have the option to add on 17.5%. Alternativly you can keep the price the same and just take the 17.5% out of your current price and profit (so you will effectivly be charging less but with the VAT addition they will never know the difference).

You can also claim the VAT back through some crazy law I dont understand so it shouldnt really make a difference, I could be completely wrong though.

 

[adam]

Yes you can charge the ad agency VAT on top. The prices they quote normally exclude VAT and you are "turning over" (receiving income) in excess of the threshold so register now or get fined.

 

[SuffolkDesigns]

If your clients are VAt registered they will just claim back the VAt you charge them, so it will not make any difference to the price they pay in reality

 

[Joyous]

I run a large website which I am now earning anywhere from £3k to £6k per month in advertising revenues from advertising agencies.

If your earning £6k a month then at some point you are going to break through the VAT registration threshold of £61k per annum so it's advisable to register for VAT.

As others have said the ad agencies themselves will probably be VAT registered so are unlikely to start jumping up and down when you add 17½% onto your invoices.

Regards

Joy

 

[zlib]

Hi,

Thank-you for your responses.

The ad agency is Google (google.com/adsense). They are of course operating in the US, so VAT does not apply to them here in the UK (they provide no information about it on their site).

Fortunately I've only been receiving these high earnings for the past 4 or 5 months, so I'm okay for now. Just wanting to get all the info just in case.

I would hate to have to charge my existing clients VAT (monthly subscriptions), it would probably hurt my business.
However, the site that is earning the revenue is separate to my main business site, could I get away with registering it as a separate business and only have to pay VAT for that business?

Thanks.

 

[Scott-Copywriter]

I would hate to have to charge my existing clients VAT (monthly subscriptions), it would probably hurt my business.
However, the site that is earning the revenue is separate to my main business site, could I get away with registering it as a separate business and only have to pay VAT for that business?

Thanks.

You can make both websites part of seperate limited company identites if you wish to do so. If you do then you can have one registered for VAT and not the other (depending which one passes the VAT threshold). It's more work involved but then you only charge VAT on the site which is breaking the threshold.

 

[zlib]

Thanks, might be worth doing that but we shall see.

The ad revenue is coming from a US based company who don't have to deal with VAT in the UK, doesn't this mean any earnings from them should be exempt?

 

[SuffolkDesigns]

I believe that if they are in the USA then you do not need to charge them VAT even if you are VAT registered.