Flat Rate VAT For Affiliate Marketing
Using the UK flat rate VAT scheme is quite often beneficial for affiliate marketeers. Many in the affiliate marketing sector have low overheads and in particular small amounts of input tax (VAT charged on purchases).
Under the flat rate scheme, input tax is not reclaimable and the VAT paid to HMCE is calculated as a percentage of gross sales. Gross sales are net sales + the VAT charged to the networks.
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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, we at HRBS would be pleased to help you. For a fixed fee quotation please click here.
