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HMRC response; VAT, agencies & digital services

what are the VAT implications for tens of thousands of individuals who have uploaded content?

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In response to a previous thread HMRC were asked for further clarification. A person uploads content, the website sells it and pays a commission to that person. The website operations are classed as a b2b supply therefore no VAT is added by the website on the sale price. Instead VAT is added to the commission payout to the person who uploads content for their ‘agency service’. 

1/ The website however should be charging VAT as without doubt they are setting the general terms and conditions of sale, would you agree to this? 

2/ As the agent does not charge VAT, what is the implication to the people who have uploaded content, should they be accounting for the VAT on the price paid by the end consumer and submitting VAT returns, as they are making the B2C supply? ( presuming turnover + €10k )

HMRC’s response:If you are the host of a platform that allows third parties to sell services through, then you as the operator are liable to account for the VAT unless the following conditions apply:

-digital platforms and everyone else involved in the supply must identify who the supplier is in their contractual arrangements. ( website contracts do state they act as a collection agent )

-invoices, bills or sales receipts must identify that supplier and the service supplied (could be done) 

-digital platforms must not:

              -authorise the charge to the consumer ( could be argued the uploader authorises this )

              -authorise the delivery ( could be argued the uploader authorises this )

  •               -set the general terms and conditions of the sale ( can’t see how the uploader would ever be able to set these, they can only set the sale price and have to agree to the websites very specific terms of sale, payments, refunds, processing, data security etc. )

 

Replies (9)

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By WhichTyler
15th Oct 2019 17:35

What is your question please?

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By JoF
15th Oct 2019 17:43

I think perhaps he couldnt find his original thread to add the comment to it.

https://www.accountingweb.co.uk/any-answers/vat-rules-for-digital-servic...

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Replying to WhichTyler:
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By amateurexpert
15th Oct 2019 18:48

The main question now is: As the agent does not charge VAT, what is the implication to the people who have uploaded content, should they be accounting for the VAT on the price paid by the end consumer and submitting VAT returns, as they are making the B2C supply? ( presuming turnover + €10k )

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By paul.benny
16th Oct 2019 07:31

Mr/s amateur expert: As quoted, the response from HMRC rehearses elements of the law and does not comment on the specific facts of the case. You had very considerable input to your previous question and I'm not sure that revisiting it will cast any more light.

You've told us that your friend is VAT-registered and has an accountant. She should rely on that accountant's advice - or get a new one who has relevant expertise.

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By amateurexpert
16th Oct 2019 11:42

There's been conflicting advice from several accountants. It's a very grey area hence the asking for consensus here. Most of her friends who this affects aren't VAT registered but do earn +€10k so would these people have to submit VAT returns?

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By paul.benny
16th Oct 2019 14:44

It's not particularly grey but it does depend on the precise facts. If your friend has received conflicting advice, it may be that the advisor was lacking in expertise or more likely that the full facts weren't provided.

To repeat myself, the response from HMRC deals with generalities as they affect platform owners and there is nothing in there that changes the advice given in the previous thread.

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By amateurexpert
16th Oct 2019 16:33

It's quite grey you and les were the only people who commented with some breadth of knowledge and the €10k anomaly even caught you out so this threads good for bringing this area up for discussion if nothing else.
We covered people registered for VAT but if someone is not VAT registered will the way in which these 'agents' operate mean these people have to complete VAT returns?
This has got to be a significant source of new income for VAT professionals, given all the back dated returns and tens of thousands of people this is affecting. As soon as these platforms are exposed of course and people realise their obligation.

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Replying to amateurexpert:
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By paul.benny
16th Oct 2019 17:33

Sorry, Mr/s amateur expert, I've better things to do.

To repeat part of a response from your previous question

There are EU proposals to address the VAT-evasion which will make the platforms liable to account for VAT: https://www.accountingweb.co.uk/tax/business-tax/france-steps-up-vat-fra... .

I have no direct knowledge but think it is likely that HMRC will adopt a similar approach for physical and digital services. It's far easier to pursue the platforms and establish a principle than to go after individual low value traders - as they are doing with uber, for example.

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By JoF
16th Oct 2019 16:55

Plus of course we have no idea what was sent to HMRC to illicit such a response.

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