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Adwords, Bing, Facebook, Twitter And VAT Registration

Do you need to register for VAT?

vat return Adwords, Bing, Facebook, Twitter And VAT RegistrationTo find out whether you need to be VAT registered you need to calculate your VATable supplies each month and compare the total for the last 12 months with the VAT registration threshold.

For this calculation, non UK advertising expenditure such as Google Adwords, Facebook, Twitter and Microsoft/Bing should be added onto your turnover in working out your VATable supplies.

This is because, for VAT purposes, advertising from non UK suppliers comes under the Reverse Charge rules, and VAT is accounted for by the recipient of the services (i.e. the customer) in their VAT return.

The purpose of the Reverse Charge is to put you, as a VAT registered business, in the same position as if you had received the supply from a UK supplier rather than from one outside the UK. You are therefore treated as both the supplier and customer for UK VAT purposes (for VAT only, not income or corporation tax).

How much is the VAT registration threshold?

The current VAT registration threshold is £85,000 for the preceding 12 months. The VATable supplies calculation should be done every month and take into account the previous 12 month’s figures. If you exceed the threshold in the month, you have until the end of the following month to register. Your VAT registration will be effective the first day of the following month.

For example, if your VATable supplies for the 12 months ended 31 July 2019 (as calculated between 1 August 2018 and 31 July 2019) exceeds £85,000 , you have to register with HMRC by 31 August 2019 and the VAT registration will be effective from 1 September 2019.

Adsense income and other non UK commissions (eg US, Gibraltar etc) are excluded from this calculation as they are “out of the scope of UK VAT”. Commissions from EC based networks such as Amazon are also “out of the scope of UK VAT”.

If you have met the threshold or wish to voluntarily register for VAT, we at HRBS would be pleased to help you. Our VAT registration service costs from £260.00 and includes a review to check when you were required to register for VAT and the first VAT return in which you can reclaim some of the VAT incurred prior to the registration date.

For a fixed fee quotation please click here.

[article updated 01 August 2019]