Flat rate VAT scheme
Is the VAT flat rate scheme right for you?
Whether or not the VAT flat rate scheme is beneficial for you would depend upon the administration costs saving due to its simplicity weighed against the fact that in most circumstances, input VAT cannot be reclaimed.
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How to reclaim VAT on Google Adwords
Google Adwords is based in Ireland and under EU VAT law they charge 21% Irish VAT (UK is 15% from 1 December 2008).
However, if you use Adwords for business purposes you can reclaim the Irish VAT. Many accountants are unaware of this fact.
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Adwords And Your VAT Return
Do you need to register for VAT?
To decide whether you need to be VAT registered you need to calculate your VATable supplies. For this purpose Adwords expenditure should be added onto your turnover in calculating whether you reach or exceed the threshold for registration. The current registration threshold is £67,000 for the preceeding 12 months (threshold changed 1 April 2008).
Adsense income and non UK/EC income (eg US, Gibraltar etc commissions) are excluded from this calculation as they are “out of the scope of UK VAT”.
The rest of this article assumes that you are VAT registered. If you have met the threshold or wish to voluntarily register for VAT, HRBS would be pleased to help you. For a fixed fee quotation please click here.
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VAT for affiliate marketeers
I have many enquiries from affiliates who are confused as to how VAT affects their business. In particular the confusion about Adsense and Adwords. I have posted much of this information on the excellent a4uforum , but summarise it here.
VAT registration
The registration threshold is £67,000 (effective 1 April 2008) of taxable turnover for the preceeding 12 months. For VAT registration purposes, Adwords expenditure should be added onto your other turnover in calculating your taxable turnover and whether you should be VAT registered.
For example if your Adwords spend is £27,000 and commission income (from UK networks) is £40,000 then you must register for VAT.
