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bigduckontax, Accountant
Category: Tax
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As part of a social network I run, clients can enhance their

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As part of a social network I run, clients can enhance their profile for a fee. My partner insists these are liable to VAT, I am not so sure. Who is right ?
Hello, I'm Keith and happy to help you with your question.
Your partner is right, but soft. Unless your turnover exceeds or is likely to exceed 81K per annum your business would be below the VAT threshold rendering VAT and accounting therefor unnecessary.
However, if your clients are outside the EU (remember the Isle of Man and the Channel Islands are not part of the EU) then those supplies you make are exports and zero rated for VAT so if these are a substantial part of your business then you might obtain a cash flow advantage from the reclaim of input tax on supplies of goods and services you buy in to your operations; just a thought. On the other hand, you would have to charge VAT to UK clients and that could render activities no longer competitive.
I do hope I have put your mind at rest over this matter.
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Thank you for your support.