With the success of websites such as 'Onlyfans' ( turnover +£150 000 000 ) it is apparent this field is ever growing and they have an inventve way of avoiding paying any VAT on digital services by acting as an 'agency'.
They may pay VAT on their commission amount that they charge to the creator ( person who uploads the media ) as in theory in their eyes they are making a B2B supply...so does this mean the liability of VAT moves back to the 'creator?
Would you say this is a legitimate way of operating?
The terms for 'operating a digital platform and accounting for VAT' in the revenue guidelines for VAT rules for supplies of digital services would therefore be irrelevant as it's a B2B supply?
Here's a question raised to the revenue written services :
The business is a subscription based social media website with a pay per minute live cam option. ( much like facbook except you pay to view someones profile on a monthly basis ). The profile may contain pictures, videos, documents and audio files. Live cam is one to one webcam charged per minute. Nothing is downloadable, content can only be viewed on my website. ( presume no educational content )
I take payments ( processed by a payment merchant ) for subscriptions / live cam on the website and then pay the creators of the profile 80% and charge 20% admin fee.
Customers are individuals who pay to view media from someone ( the 'creator' ) registered on the site.
A 'creator' can upload or broadcast when their address, ID, and bank details have been verified.
VATMOSS position; ( presume uk threshold reached )
1/ The 'creator' ( or person who uploads the media, who for this example is located in the UK ) will be generating and receiving an income from their digital media uploaded to my website by selling it on there. They will therefore be deemed to be a business not operating as a private individual. They are advertising and being paid by the platform / agent ( me ). Therefore a b2b supply.
2/ My website acts strictly as an agent to enable the creator to sell their media. I collect the money and pass the payment on to the creator. For example a customer pays £100 to view a profile. The creator receives £80 and I charge £20 to the creator.
3/ 20% UK VAT will be added to the 20% charge to the ( UK based ) creator.
4/ I am charging and receiving payment from a customer - but not charging for my supply - simply collecting the income on behalf of the creator. This will be made clear via signed terms and conditions to both customers and creators who use the website. The website will be collecting money on the creators behalf. My supply is to them acting as a collection agent.
Contractually i am not supporting the end consumer therefore business operations are classed as a b2b supply. My customer is the 'creator'. The website would therefore not fall within the scope of VATMOSS for the supply of digital services.
***I have the written response from revenue and it may surprise you. If there's enough interest and people post their opinions to the questions I'll put it here and i'm sure this will leave even more head scratching in this very grey area! ( and the term 'i' 'my' have been used for scenario purposes only )