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16 Yr Old - You Tube Income .

Anything specific to consider

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Existing client phoned yesterday stating that his 16 year old son was on track to achieve/earn £100k from You Tube advertising/videos.

After picking myself up off the floor, thoughts then turned to VAT/HMRC Registration etc.  Anyone had any experience of this and is there any matters that need particular attention etc?

Any advice gratefully received.

 

Replies (19)

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By Tim Vane
07th Apr 2019 15:31

Happens regularly. It is not at all uncommon for tech savvy youngsters to make good money from online trading. Usually they only seek help when they are already on the radar so it looks like you are a step ahead with this one. Treat as you would any other business. At 16 they should already have an NI number so notify HMRC and take it from there.

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RLI
By lionofludesch
07th Apr 2019 17:43

Agree with Tim.

No different from any other start up. Apart from dealing with a client possibly not in tune with the tax world.

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By WhichTyler
07th Apr 2019 23:31

Quite often they get 'paid' in freebies (depends on the area they cover but could be holidays, clothes, tech...) on the expectation they will promote them.

Plus Amazon affiliate commission and other benefits that may not go through a bank account...

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By ireallyshouldknowthisbut
08th Apr 2019 09:26

The main issue is when did the income go over the PA threshold?

its possible, but unlikely to have all happened in 12 months. So you may need to do a couple of years of back taxes.

The only other issue, is the 'who is the client?' type questions. I would treat the son as the client, but ask the parent to countersign. If you treat the parent as the client you may alienate him. Depends on the son and the parent of course.

The good news is he will already have an NI number. The really young ones are more hassle when they dont have one.

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Replying to ireallyshouldknowthisbut:
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By paul.benny
08th Apr 2019 14:53

ireallyshouldknowthisbut wrote:
The only other issue, is the 'who is the client?' type questions. I would treat the son as the client, but ask the parent to countersign. If you treat the parent as the client you may alienate him. Depends on the son and the parent of course.

Good point. Bear in mind that (in law) the 16 year old is still a minor and so contracts and liabilities may not be legally enforceable. All the more reason to get the parent to countersign.

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By Gone Sailing
09th Apr 2019 13:29

May I add a secondary question on the same theme ...

If VAT registration should have been at a past date, and Output tax cannot now be charged to the customers, is the 'past' VAT due to HMRC (presumably at 20% of the sales in the period which should have been registered) allowed as a Corporation Tax or Income Tax deduction?

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Replying to Gone Sailing:
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By lionofludesch
09th Apr 2019 17:55

Not quite.

One sixth of the sales is the amount which is paid over and this is deducted from sales - just like ordinary, everyday output tax.

Which is what it is.

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Replying to lionofludesch:
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By Gone Sailing
09th Apr 2019 18:11

Thanks, I was tempted to add "or is it a sixth?" but persuaded myself it was a fifth on the basis of "you should have charged VAT why should HMRC lose out?"

But, now that it has to be written off, does it get CT or IT relief?

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Replying to Gone Sailing:
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By lionofludesch
09th Apr 2019 22:07

Yes.

It's deducted from sales.

So less profit.

And less tax.

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Replying to lionofludesch:
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By Gone Sailing
10th Apr 2019 09:01

@Lion that's basic VAT.
My question (Gone Sailing 09th Apr 2019 13:29) was about Output Tax that should have charged at a time when they should have been registered for VAT but weren't, and now have to hand over the output tax to HMRC at a cost to the business.
Is this an allowable deduction for Corporation Tax / Income Tax?

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Replying to Gone Sailing:
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By Matrix
10th Apr 2019 09:14

The sales would be treated as VAT inclusive so 1/6 would be paid as VAT and the double entry would be Dr Sales Cr VAT so the taxable profits will reduce giving you your tax relief.

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Replying to Gone Sailing:
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By lionofludesch
10th Apr 2019 09:21

Gone Sailing wrote:

@Lion that's basic VAT.
My question (Gone Sailing 09th Apr 2019 13:29) was about Output Tax that should have charged at a time when they should have been registered for VAT but weren't, and now have to hand over the output tax to HMRC at a cost to the business.
Is this an allowable deduction for Corporation Tax / Income Tax?

I'm not sure I can make it any clearer. By reducing your sales, you have your deduction.

Are you wanting to reduce your sales AND claim a deduction as well ? That would be having your cake and eating it.

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Replying to lionofludesch:
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By Gone Sailing
10th Apr 2019 09:25

@ Lion, many thanks, I didn't read your answer correctly, more caffeine.

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Replying to Gone Sailing:
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By lionofludesch
10th Apr 2019 09:43

Gone Sailing wrote:

@ Lion, many thanks, I didn't read your answer correctly, more caffeine.

Sure - we all have days like that.

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By Glenn Martin
10th Apr 2019 13:01

Never ceases to amaze me that these 16 year old virgins can make that sort of cash my playing video games or videoing themselves dicking about.

No wonder kids are hard work these days as they see that as a career .

In America family members seem to take on the role as of managing these geeks and seem to rip most of the money of them

After you have sorted his tax out get him to see a lawyer and an IFA to secure his wealth as it is likely to be short lived and any amount of people will be queuing up to fleece him

I don’t know if I would have the patience to deal with a 16 year old.

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Replying to Glennzy:
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By Jdopus
11th Apr 2019 14:01

There's actually a lot of work that goes into making it actually profitable, I know a few people who have made money doing this and it's really not the dick around that you might think.

It's a constant sales and marketing push and requires extremely consistent broadcasting and viewerbase building to get anywhere. You have to be extremely dedicated and personable to make any money doing it.

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By pmt1pff
12th Apr 2019 09:57

just out of interest (that is what these forums are for i suppose!) would there be a VAT issue? if its youtube then he isnt selling anything as such, it would be youtube using his videos for ads. youtube sell ad space to customers and put the ads on his videos. so either if he is legally selling the ads then i guess youtube would be his agent here and should sort the vat for him, OR if he gets a commission then if this is under a contract with Youtube US then no VAT.

he may also have sideline trades i guess, but was wondering on the above. lots of ifs buts and maybes, i am sure there will be a contract with youtube which will explain this sort of stuff.

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By pauljohnston
12th Apr 2019 16:37

If a Ltd Co can be a director from 16.

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By pauljohnston
13th Apr 2019 10:55

Congratulations to the Son.

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