Digital sales, VAT & Paddle

In all seriousness though. IF I were to get into digi sales, I’d go the VAT MOSS route I think. Yes, it’d mean being registered again, but so long as I don’t have to charge VAT on other sales to UK clients, that doesn’t bother me too much.

Saying that, are there rules about de-registering then registering again? Something in the back of my mind is telling me there must be a five year window? I might have made that up though.

IMHO and dont shoot me if Im wrong here (and I have only run a VAT business several years ago that dealt in physical products solely sold in the UK)…

If your turnover (gross) is under the threshold your dont have to register for VAT. This means that you should get all the money for your product less handling fees.

The drawback of running a business not registered for VAT is that your business cannot claim back VAT that you pay to your suppliers. So for instance the other day Zoom (the webinar software) wrote to me and asked for my VAT no. They wrote saying they were now registered for VAT and therefore their prices were going up by 20% Now if I was VAT registered this would not have mattered as I could just claim back that 20 % from the VAT man (or woman ). As I cant it is costing me that 20% extra.

If I choose to be (or have to be) VAT registered then to get the same amount of profit from my service (like Zoom did) I would have to add 20% to my product/service. So if I have quote £100 for 2 hours work once I am VAT registered I would have to charge £120 for the same amount of profit.

Does this help?

Im not sure about digital implications or practises of online companies, but I’ll be asking my accountant friend tomorrow because this is an interesting aspect I hadn’t thought about. Thanks for starting the thread Steve.

the threshold is zero for digital downloads, that is the issue

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Really? Is it not the same for every UK business no matter what they sell or how?

The general theory goes that ALL digital goods and services sold online have to include VAT, which is payable to the VAT person. In reality, as I’ve discovered, that isn’t quite the case.

As for general VAT: Yes, you must pay VAT on all your income (it’s you who is VAT registered, not the business).

You can claim the VAT back on the business related services and goods you purchase, so this offsets some of the VAT in that you have to pay.

So, if you invoice out £100 in a quarter (VAT is paid quarterly) but spend £100 on goods which are themselves VATable, the VAT out (roughly £17) is offset against the VAT in (£20) so you pay the VAT person £3.

It is for digital supply. Here is the less simplified version:
https://www.gov.uk/guidance/the-vat-rules-if-you-supply-digital-services-to-private-consumers/#vat-accounting-options-for-uk-businesses-supplying-digital-services-to-consumers

Nooooooo. Not unless you have registered for VAT

That’s the point. If the digi goods/services are delivered via an automated process, you will pay VAT on the sales, whether you sell £1m worth, or £1. So yes, you must be VAT registered (but there are ways and means not to charge UK customer VAT, see above).

EDIT: This is why people like Paddle has sprung up.

Oh Im going to be showing my accountant friend that doc tomorrow… in the meantime I’ll shut up lol!!!

i will happily pay VAT in a variety of european countries in trade for an EU work visa and any sort of remotely humane healthcare. heck, i’ll pay your VAT too if they let me in. please?

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You don’t want in to the UK then.

You are welcome here anytime - I’ll marry you if you want citizenship :)

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Can I be bridesmaid?

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P.S Its £108 for an annual NHS prescription pre payment certificate. That’s all the pregabalin you can eat for approx $139

Welcome to Germany 😃

(UK isn’t an option anyway in near future 🤣)

Brave man.

Who’s gonna the bride?

That’s also my knowledge.

Tav in his wedding dress.

The serious point here though is that it is not the business that pays VAT - it is the consumer.

The cost of this to a business is merely in administration (cost of sales), you are forced to act as a proxy tax collector for the government of the domicile into which you sell.

These costs can of course be significant to small businesses which is why the law was so vehemently opposed. We should also remember that it all came about following public outrage at the tiny amounts of tax paid by Amazon, Google, Apple etc etc.

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Free in Wales. We have no prescription charges but plenty of other issues to even it out.

This year, with my wife returned to work full time for the sole purpose of getting access to good healthcare. Even a government funded school in a wealthy district, in a wealthy state, no longer provides full healthcare. But it does reduce the cost by half. It will “only” cost us $16,000 this year.

No joke, this is actually a big win. For several years up to 2017 we paid over $30,000 (for a family – two adults two teenagers). And since Trump it’s skyrocketed – it was expected to go up 15% in 2019.

However, all insurance companies refuse to pay for pregabalin (a pill i take 6 times a day to reduce the “tingles” from nerve damage i got snow boarding about 20 years ago).

The price for 1 months worth of pregabalin (a.k.a. Lyrica in the US) 50mg tablets: $1376 currently. So I will spend another $16,000 just on pills alone.

So roughly $32,000 – and that’s if no one gets sick.

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