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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4199
Experience:  FCCA FCMA CGMA ACIS
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Re: UK VATMy income is made up of commissions I receive

Customer Question

Re: UK VAT
My income is made up of commissions I receive from two companies: Ireland (Google AdSense) and Israel (pay per download) - I do not perform any services nor sell any goods within the UK or outside it on a regular basis, apart from the occasional one-off.
During the last 12 months I registered for UK VAT.
Are goods and services purchased from *outside* of the UK to help maintain my revenue liable for UK VAT and have to be documented and calculated for VAT return purposes, even if my VAT number does not appear on the email receipt.
Submitted: 3 years ago.
Category: Tax
Expert:  bigduckontax replied 3 years ago.
Hello, I'm Keith and happy to help you with your question.
The services you provide are classed as exports and zero rated for VAT. For the odd one off you must, of course, account for VAT as you are registered. It you purchase goods and services outwith the UK then they will not bear UK VAT and cannot be reclaimed as inputs. Any goods and services bought within the UK will, of course, bear VAT and can be reclaimed. Your business might well be a net recipient of reclaimed input tax. I used to run the accounts of two omnibus companies who made almost exclusively zero rated supplies and their reclaims were so high that they made monthly VAT returns instead of the normal quarterly.
Here is HMRC guidance [edited] from VATPOSS08200 on input tax which may be reclaimed as inputs by exporters:
'A person who makes no taxable supplies in the UK but makes supplies under (3) above is entitled to be registered on a voluntary basis. A person who makes no taxable supplies in the UK but makes supplies under (2) above will be able to register on a voluntary basis if
They have a business establishment or usual place of residence in the UK, and
They receive taxable supplies from UK VAT registered businesses, for which they are entitled to recover input tax
They receive taxable supplies from another Member State which are subject to the reverse charge, or
They import goods into the UK, for which they are entitled to recover input tax.'
Goods and services purchased for use are never revenue liable for VAT, but they may well constitute inputs and reclaimable, a very different kettle of fish.
I do hope I have helped throw some light on VAT for you.
Customer: replied 3 years ago.

Hi Keith

Thanks for the reply. That definitely helps shed some light.

One more quick question (if I'm not being too cheeky)

I still need to document the 0% rated income and expenditure in my VAT "books", correct?

Cheers

Nick

Expert:  bigduckontax replied 3 years ago.
Hi Nick
It is always in my opinion a good idea to keep records of income and expenditure either by means of bills, invoices etc. In the case of zero rated supplies I always raise an invoice to support my accounts, but a written list of receipts would suffice.
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Expert:  bigduckontax replied 3 years ago.
Thank you for your excellent support.