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VAT rules for Digital Services & paid social media

Is this a legitimate way to trade? Will the liability of VAT fall back to the 'creators of media?

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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.

Summary; 

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 ) 

Replies (63)

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chips_at_mattersey
By Les Howard
22nd Aug 2019 12:21

I am unsure why you are asking your questions, but will make some comments.
Where the person operating the website purports to act as Agent, that depends on the formal contract and the actual day-to-day operation. I am assuming your are the Agent. As you say, VATMOSS doesn’t not apply to B2B supplies, so normal VAT rules apply. You charge UK VAT to UK based clients, and Reverse Charge to non-UK clients.
20% VAT is added or included depending on the contract.
If HMRC take a particular view, that is merely opinion and is open to challenge. As a practitioner, I have to say that they are not always correct!

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Replying to leshoward:
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By amateurexpert
22nd Aug 2019 00:01

Hi Les, thanks for your comment, i've read many informative posts from you before.

I'm curious because I know a friend who's accountant has informed them that they may be liable for any VAT due and looking into the model that these companies operate it seems to be incorrect.
For example according to the guidance document:

"Digital platforms and accounting for VAT"
If you operate a digital platform that third-parties sell e-services through, you’re liable to account for the VAT on those sales unless you meet all of the following conditions:

/digital platforms and everyone else involved in the supply must identify who the supplier is in their contractual arrangements
/invoices, bills or sales receipts must identify that supplier and the service supplied
-digital platforms must not:
/authorise the charge to the consumer
/authorise the delivery
/set the general terms and conditions of the sale
-If you do not meet all these conditions:

/you must treat the sales of third-party e-services as if they were your own
/you must declare any VAT that is due
/the responsibility for accounting for any VAT moves back to the person who supplied you if you’re giving intermediary services to that person

Here my questions would be:
1/ Presuming a B2B supply are these terms relevant? If not then does the VAT responsibility fall back to the creator uploading the content if the platform is just acting as an 'intermediary' or agent?

2/ Also if not relevant then the agent must establish and keep evidence that the creator of content is actually a business ( which I would say virtually none of the 100 000+ members are )
Quote "If you supply digital services and your customer does not give you a VAT registration number (VRN), you should:

treat it as a business-to-consumer supply
charge the VAT due in the customer’s EU member state
If a customer cannot supply a VRN but claims they’re in business but not VAT-registered because, for example, they’re below their EU member state’s VAT registration threshold, you can accept other evidence of your customer’s business status. For example, a link to the customer’s business website or other commercial documents.

It is your decision whether to accept alternative evidence that the customer is in business and your customer cannot ask you to treat a supply as business-to-business if they have not given a valid VRN.

If you accept that your customer is in business, the supply does not come within the scope of these business-to-consumer arrangements. With a cross-border business-to-business supply the customer will be responsible for accounting for any VAT due to the tax authorities in their EU member state.

You must complete and submit a quarterly European Community Sales List declaration to HMRC. This allows other EU member state tax authorities to ask for details from the database where these declarations are securely stored, for taxpayer compliance and audit purposes"

...2/ How would these websites attain sufficient evidence, would the fact that the individual is gaining an income off the website define them ( the creator ) as 'being in business'and be suitable evidence?

3/ If the terms are relevant then surely the platform would :
/authorise the charge to the consumer.
/authorise the delivery.
/set the general terms and conditions of the sale.
...hence they should be charging VAT to the consumer?

I look forward to your thoughts!

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Replying to amateurexpert:
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By Accountant A
22nd Aug 2019 01:21

amateurexpert wrote:

I look forward to your thoughts!

If the matter is so fundamentally critical to the commerciality of the business, you would be very badly advised to wing it on the basis of free "advice".

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Replying to Accountant A:
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By amateurexpert
22nd Aug 2019 02:56

Thanks for the input however it is not my business and I don't need free advice.
This platform benefits many people and i'd like to think people comment for the greater good and to engage intelligent debate.
There are over 9 000 000 users of such platforms in just over 3 years so i'm sure a great deal of paid consultation may result in raising a topic like this.

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Replying to amateurexpert:
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By paul.benny
22nd Aug 2019 09:19

I think you are misinterpreting the above guidance.

As understand your scenario
- I pay you a subscription to view content
- you remit that to the creator, less a fee

On that basis, you should charge me VAT on my subscription. If I am in another EU member state, you should account for the output tax under VAT MOSS, unless I am a VAT registered business.

VAT treatment of payment to the content creator depends on the exact contractual arrangement. Are you purchasing/licensing content? (in which case, they should be charging you VAT). Or are you truly providing a platform like amazon/eBay?

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Replying to paul.benny:
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By amateurexpert
22nd Aug 2019 11:22

Thanks for the comment, I agree with you....
- I pay you a subscription to view content
- you remit that to the creator, less a fee

However the websites do not charge me VAT on my subscription.

They are sidestepping this obligation as they treat the supply as a B2B.

In theory they are providing a platform like eBay however their evidence to collect proof of the creator 'being in business' is unacceptable and their platform as mentioned in my first reply above?

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Replying to amateurexpert:
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By paul.benny
22nd Aug 2019 12:13

A purchase from a third party seller via amazon is a discrete transaction and there is a 1:1 relationship between customer and supplier. It's not too difficult to argue that that amazon are a platform and should not be obliged to account for VAT on the full selling price. (That said, there are proposals to put the VAT obligations onto amazon, eBay, et al)

A subscription to a website with allowing access to content from multiple providers doesn't have that 1:1 relationship. I think it's very difficult to support the idea that the website owner should not account for VAT on the entirety of the subscription.

If the income is >£85,000, then prima facie, the websites should be accounting for VAT, whether the customers are business or consumer.

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Replying to paul.benny:
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By amateurexpert
22nd Aug 2019 16:37

Thanks for your comments, thats an interesting point, the websites only allow you to view the content from person you have paid to subscribe to. ...in the same way eBay allows access to many sellers but you choose to buy only one product....would you say your point is sill valid in the case?
With the supply of digital services the guidance states regardless of turnover a B2B supply is not accountable for VAT ie; in this case the website wouldn't have to charge it to the purchaser of content?

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Replying to amateurexpert:
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By paul.benny
23rd Aug 2019 14:17

If my purchase only allows me to view content from one provider, it may indeed be easier to support a contention that the website is acting as agent.

Quote:
regardless of turnover a B2B supply is not accountable for VAT

I don't know where you get that idea. Cross border B2B transactions may be zero-rated but both parties have VAT accounting and reporting obligations

Quote:
...the website wouldn't have to charge it to the purchaser of content?

As already discussed, it's moot whether VAT is chargeable on the full price. Even if accepting the position that the website is an agent, if the content provider is above the registration threshold, they must account for VAT on their income.

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Replying to paul.benny:
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By amateurexpert
23rd Aug 2019 18:36

Thanks Paul,

regarding turnover of a B2B supply I meant that the platform wouldn't have to add VAT to the purchase cost...they would add it to their commission payment to the creator, which is indeed what they do.

I'm surprised that this method is acceptable given the only evidence the site collects that the 'creator' is a commercial enterprise is the fact that they are earning income off the platform however several people on this thread say thats sufficient.

If that is the case what are your thoughts on the 'creator' ( presuming personal threshold is not reached ) having a VAT liability because ( presuming ) they exceed the €10 000 threshold for total EU supplies of digital services.I'm not sure whether this is relevant however they have been classed as a business in this case .....is their supply to the 'agent' subject to VAT?

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By Tax Dragon
22nd Aug 2019 06:02

Way too many words for me to read at this time of day, but if you follow this forum you'll know that not reading the question never stops me answering!

VAT falls primarily on customers. The few words I did read make it seem as if you think it's a tax on suppliers.

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Replying to Tax Dragon:
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By amateurexpert
22nd Aug 2019 11:27

Thanks for your comment, that's exactly what I thought however in this case VAT is being charged to the customer ( the creator ).
In accordance with the supply of digital services this cannel be done if the transaction is B2B.
There is no evidence that it is a B2B so the transaction should be treated as a B2C and VAT charged to the correct customer who is the purchaser of the creators content...hence the platform should be adding VAT to the sale price?

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Replying to Tax Dragon:
RLI
By lionofludesch
28th Aug 2019 08:38

Tax Dragon wrote:

VAT falls primarily on customers.

In theory. But that depends on whether, in practice, the supplier can increase his charges in the market. It can, in effect, be a tax which falls wholly or partly on the supplier.

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Replying to lionofludesch:
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By amateurexpert
28th Aug 2019 13:02

In the case of digital services it is different. The onus of VAT depends entirely on whether the transaction is a B2B or a B2C.
In this case which would you say it is....and on a separate point would you say live cam will be classed as a digital service?

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chips_at_mattersey
By Les Howard
22nd Aug 2019 10:56

Another comment is that major websites operated by large companies will instruct lawyers to draft Ts & Cs to protect their position with respect to VAT. No private customer will ask for the Ts & Cs to be amended for their benefit.
This is in contrast with the comments you obtained (from HMRC) which insist that the digital platform must not set the conditions. As far as I am aware, the major digital platforms set the conditions for use which include the agency issue.

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Replying to leshoward:
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By amateurexpert
22nd Aug 2019 11:46

Thanks Les, yes I agree with that the platforms do set the conditions for use and do cover the agency issue.

However acting as an agency they are incorrectly determining that the customer ( the creator ) is a business as there is no evidence that they are in business ( except that they are earning an income off the website...but this surely is not enough ?)

Also as the platform does set the conditions of use ( ie; general terms of sale ) they should be liable to account for VAT on the sale....or are these conditions not applicable if it's a B2B sale?

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Replying to amateurexpert:
chips_at_mattersey
By Les Howard
23rd Aug 2019 13:51

On the narrow point that the creator is in business: for VAT purposes the definition of business is very broad. The fact that the creator is earning income from the website is sufficient to establish that. The B2B test is therefore met.
Liability to VAT registration is a separate matter of course.

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Replying to leshoward:
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By amateurexpert
23rd Aug 2019 18:38

Thanks Les,

Interesting indeed, it seems like the platforms are operating correctly which is a surprise!

If that is the case where a B2B transaction is being made between the agent and the creator what are your thoughts on the 'creator' ( presuming personal threshold is not reached ) having a VAT liability because ( presuming ) they exceed the €10 000 threshold for total EU supplies of digital services.
I'm not sure whether this is relevant however they have been classed as a business in this case .....is their supply to the 'agent' subject to VAT?

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By Duggimon
22nd Aug 2019 15:04

Your points 1 and 2 are mutually exclusive. You state in 1 that the content creators are supplying the platform and the platform is paying them for that supply. Point 2 states the platform acts as an agent. It's one or the other and the VAT position depends on which it is.

Do the users subscribe to the platform and pay subscriptions to the platform, or do they subscribe to the creators and pay subscriptions separately for each creator to whom they subscribe?

The VAT position is further complicated by how the platform is used. My wife has a shop on Etsy, she sells a mixture of physical and digital items. She is not VAT registered. The physical items carry no VAT, the digital items do, because Etsy, the platform, is the supplier in the digital transaction as they are the medium through which the product is transferred.

The VAT position depends on some things you are a bit woolly on and other things you've made no reference to. What are people selling on this platform, how is it delivered? What is the agreement between the platform and the creators? Between the platform and the users?

You're jumping ahead to B2B/VAT MOSS considerations when you're yet to establish who is supplying what to whom, which is the basis of all VAT rules.

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Replying to Duggimon:
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By amateurexpert
22nd Aug 2019 17:22

Thanks for taking the time to write your thoughts.

Point 1 was raised to confirm the status of the 'individual' ie; they are technically a business as they are getting paid income from the site for uploading media....( dubious but its the only way the sites can be interpreting this as there is no other evidence that they are in business ) .......so this enabled point 2 to be raised as the websites are acting as an 'agent' as paying the creator of content would be classed as a B2B supply therefore the website wouldn't have to charge VAT on the sale of the content.

A user ( the end consumer ) would pay separate subscriptions to the platform to view each creators profile. Creators profiles consist of images, videos, audio files and documents, also live cam pay per minute. Nothing is downloadable. Like facebook but you pay to view their profile. ( Presume no educational content as this is exempt from digital services Vat )

Platforms are just selling digital media. It is delivered automatically once the payment from the customer has been accepted from the websites payment merchant.

Agreement between creator and website ( a similar paragraph to what's on the website ):
'the website' confirm that they act as a collection agent for all creators. Funds received to our account would be income of all creators with 'the website' only receiving a commission element as previously agreed with each creator. Income will be chargeable to VAT at relevant rates in accordance with VAT legislation on the creator.

Agreement with the platform and the user:
( some of the similar terms as on the websites );

/ All amounts stated in these terms and conditions or on 'the website' are stated exclusive of VAT.

/ You must pay to us the fees in respect of 'the website' services in advance, in cleared funds, in accordance with any instructions on 'the website'.

Supply.....the website is charging and receiving payment from a customer - but not charging for their supply - just collecting income on behalf of the creator. The supply is to the creator as the website is acting as a collection agent.

So in my opinion this may be correct if they are actually an agent for a business and its a B2B. However -1% of creators would actually be a commercial business and it seems the major flaw is the websites collection of evidence to support this determination that a customer is in business...?

Will this mean that the many thousands of creators on the platforms will face VAT liability ( should they have exceeded the UK VAT digital tax threshold which is just above 9k...which is relevant only for businesses but they have been classed as one ) ?

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By paul.benny
23rd Aug 2019 14:26

@OP What are you trying to determine in this thread?
- Is this trying to understand the VAT position of "adult" sites (we are talking about that kind of content here, aren’t we?) for your own general interest
- Are you trying to get advice for your ‘friend’s’ business while pretending it's a general discussion.
- Are you trying to expose a gap where there is widespread VAT evasion?

There are EU proposals to address the last – see https://www.accountingweb.co.uk/tax/business-tax/france-steps-up-vat-fra... . That article doesn’t mention digital services, but you can be sure that HMRC will be seek to bring them into scope.

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Replying to paul.benny:
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By amateurexpert
23rd Aug 2019 18:49

I'm curious because I do actually know a friend who's concerned they may be liable for any VAT due and looking into this further I've seen the area is growing exponentially with 9m users in 3 yrs...so yes indeed widespread VAT evasion.
Some 'professionally funded' sites like Patreon do charge VAT on all digital services and these 'fan' sites do not and I wondered how they are practicing. Content ranges from adult to pop stars to pets!
You seem to have an in depth knowledge in this field so presuming they are operating correctly as an agent which seems to be the consensus here....If that is the case where a B2B transaction is being made between the agent and the creator what are your thoughts on the 'creator' ( presuming personal threshold is not reached ) having a VAT liability because ( presuming ) they exceed the €10 000 threshold for total EU supplies of digital services.
I'm not sure whether this is relevant however they have been classed as a business in this case .....is their supply to the 'agent' subject to VAT?

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Replying to amateurexpert:
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By paul.benny
23rd Aug 2019 20:11

amateurexpert wrote:

I'm curious because I do actually know a friend who's concerned they may be liable for any VAT due...

If your friend is concerned about potential VAT liability , they need to get proper advice from an accountant with appropriate expertise, rather than relying on an amateur expert.

Quote:
You seem to have an in depth knowledge in this field

I don't. I'm professionally qualified with sufficient working experience of VAT to be able to get my head around the VAT guides. Mr Les Howard, who has posted here, is far more expert than me

Quote:
..so presuming they are operating correctly as an agent which seems to be the consensus here....

I don't see any consensus about anything but the VAT rules and it's a big presumption that "they" (whoever they are) are operating within the VAT regulations.

[quote].is their supply to the 'agent' subject to VAT?/quote]

Err... the principal doesn't supply anything to an agent. An agent supplies their services to the principal.

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Replying to paul.benny:
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By amateurexpert
23rd Aug 2019 22:09

Thanks for your comments, yes she has an accountant and they informed her of the grey area of VAT, she wrongly asked me for advice and I came on here to see if what I thought was correct and to raise an issue that I believe will produce a lot of forthcoming enquiries...especially for VAT consultants.

This bit I am not sure of and apologies if i've got the fundamentals mixed up:
"the principal doesn't supply anything to an agent. An agent supplies their services to the principal".

With regard to digital services and an agency performing a B2B transaction between themselves and the principal....the agency supplies their services to the principal so they add VAT on the commission paid to the principal.
The principal - as a commercial enterprise - if they go above €10k needs to account for VAT on the sale of their digital media....otherwise no digital services VAT is being paid?

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Replying to amateurexpert:
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By paul.benny
24th Aug 2019 08:34

FFS, if your friend has an accountant, she should rely on the accountant rather than trying to get a second opinion from someone who clearly lacks the relevant expertise.

Basic VAT is reasonably straightforward. Supply of digital services via an intermediary is two sorts of complication. If it's cross-border as implied by references to a €10k threshold, the complications are multiplied. Trying to grapple with that without a reasonable amount of experience is akin to trying perform surgery when you've only read medical text books.

As for principal and agent. That's reasonably basic contract law: think of an estate agent, if that's easier to get your head round. You, the owner of the house instruct the agent to sell it on your behalf. You are the principal in that transaction and are solely responsible for everything about the house. The agent is never the owner, just your representative. They are supplying you with their agency services.

In an agent-principal relationship,VAT status of the principal is largely irrelevant. The agent should always be charging VAT on their services, as does the estate agent when selling your house.

The €10k threshold refers to cross-border supplies of digital services into the UK. You've not said where your friend is based. As I've said, cross border supply of digital services is complex for VAT purposes.. Without considerably more facts than are presented here, I wouldn't like to comment definitively on the situation. And then we're getting into advice that would be chargeable.

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Replying to paul.benny:
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By amateurexpert
24th Aug 2019 13:32

Thanks for your comments, unfortunately she has approached two accountants. One said one thing and one said another. HMRC written services were contacted and they simply quoted the VAT rules for the supply of digital services document.

I can see the point of view that each accountant has stated ( one saying the platform should take responsibility and the other saying it may fall back to her for the reasons discussed ) so thought i'd come on here to raise the debate for the first time that is going to affect lots of people if the platforms face exposure...and hopefully your input will be financially rewarded many times over.

The original post was about VATMOSS as ( for those reading who are not aware ) where the 'creator' is based for the supply of digital services doesn't matter... it's where the final consumer is based.
She is in the UK.

"In an agent-principal relationship,VAT status of the principal is largely irrelevant. The agent should always be charging VAT on their services, as does the estate agent when selling your house"

In this case she has been classed as a business and her turnover is +€10k so do you think customers would ever find themselves responsible for VAT / VATMOSS on their supplies of digital services to the agent?

....the agent is not paying it as the rules for digital services differ from other agent services...as discussed on my first reply to Les which covered the HMRC advice about how the platform ( website / agent in this case ) operates.
( if a VAT registered business was selling a house through an agent, the agent would add VAT on behalf of the business on the sale price...but in this scenario the agent does not...so nobody ends up paying digital services VAT - and I think millions of people who have unknowingly been classed as a business for VAT purposes by the website may be faced with a VAT / VATMOSS obligation....
.onlyfans.com has stated its turnover has been +$750 000 000 in 3 years....thats a lot of missing VAT!...uk ltd company...VAT registered...do not add VAT on the sale of digital services! )

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Replying to amateurexpert:
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By paul.benny
24th Aug 2019 17:28

There are so many continuing misunderstandings in your posts that I've lost the will to try to explain.

Instead, let me answer the question I think you want answering, namely, does your UK adult entertainment friend have potential VAT liability?

If her income is more than £85,000, she should be registered for VAT and should account for VAT on her income. It income is less than that, there is no obligation to register in the UK.

If she is below the UK threshold but has significant income** from digital services arising from individual EU member states, it's *possible* that she should be registering in those particular countries. I've never encountered that rather narrow scenario, so I can't comment definitively.

(** >€10,000 per country, based on the equivalent UK threshold)

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Replying to paul.benny:
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By amateurexpert
25th Aug 2019 19:52

Paul, thanks for your patience and continued answers.

Please correct me if I am wrong but I believe the rules regarding digital services VAT are different....the 85K+ does not apply...exceeding the €10k digital threshold alone means VAT registration is required.

"Threshold for supplies made from 1 January 2019
To work out the value of your digital sales, you must use the figures before VAT is added.

The digital supplies threshold is £8,818. If the annual value of your total cross-border supplies of digital services to consumers in the EU in the current year and previous year is:

/ below the threshold, the place of supply is the UK.
/over the threshold, the place of supply is where the consumer is located.

Source https://www.gov.uk/guidance/the-vat-rules-if-you-supply-digital-services...

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Replying to paul.benny:
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By paul.benny
24th Aug 2019 08:42

(duplicate post deleted)

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By Tax Dragon
24th Aug 2019 22:00

Even more words now and I can't pretend to have read that many.

This is no doubt answered above but... heck. So... is your friend supplying or buying digital services? I doubt it's both.

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Replying to Tax Dragon:
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By amateurexpert
25th Aug 2019 19:14

They are supplying digital services to the platform which is acting as an 'agent' which sells them on. The 'agent' does not charge VAT on the sale as it's classed as a B2B transaction.

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Replying to amateurexpert:
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By Tax Dragon
25th Aug 2019 22:38

Great effort matching my length. I appreciate that.

The point of my question was to check that your friend really is selling digital services. I believe that the 'creative' part of 'media' can qualify as such - but only if it's (for) broadcast. Somewhere along the line I've got it into my head that your friend is not producing stuff for broadcast; rather, that she provides the skype-age equivalent of telephone sex.

If so, I suspect the whole premise of your questions may be misconceived (never mind the other misunderstandings I think there may be).

Please appreciate that I am no expert on VAT; nor do I know how the industry in question works. It's not sounding like you know that much either - at least, about VAT. I suggest your friend pays for advice.... and does so, like, yesterday.

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Replying to Tax Dragon:
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By amateurexpert
26th Aug 2019 12:46

Photo's, Video's, documents, audio files are all classed as digital media unless they are educational.
The only grey area is live webcam broadcasts. Certainly a 'significant human interaction' there...this would be a whole new area for discussion.

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Replying to amateurexpert:
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By Tax Dragon
26th Aug 2019 14:24

Using digital media does not equate to supplying digital services for VAT. As far as I know.

Anyway, whatever the rights and wrongs of any views expressed in this thread, the long and short of it is that anyone with a business turning over sums in excess of the thresholds must consider VAT. It seems to me that your friend should register, simple as.

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By Tax Dragon
24th Aug 2019 22:50

Sorry, there was a second question. Your concern is, presumably, whether your friend should be charging VAT on her services. Why would that not be the case?

Again, that must have been asked already. Sorry (again) for not engaging with what has been said. My guess is you haven't found your answers or this thread would have died by now. If you could respond in posts no longer than mine (and I'm stretching this one unnecessarily to make that easier)...

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Replying to Tax Dragon:
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By amateurexpert
25th Aug 2019 19:20

Indeed thats the question. Paul on here has patiently answered many questions and as I thought confirmed that there may well be a VATMOSS liability to my friend who is uploading their content as the websites have classed this as a B2B transaction...all unknowingly to the creators of the content...over 9 million people in total.
The question now would be regarding VATMOSS digital services rules how exposed would they be?

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Replying to amateurexpert:
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By paul.benny
25th Aug 2019 19:40

A little knowledge can be a dangerous thing. You've probably frightened your friend into thinking that she has some huge potential tax liability. As I have said before, you're like someone trying to carry out complex surgery having only previously read about medicine in text books.

VAT MOSS is a scheme for suppliers of digital services to consumers on other EU member states to account for the foreign VAT that is due without needing to register in each member state.

If your friend is VAT registered in the UK, she should be using VAT MOSS to account for the VAT due in other EU member states.

If she's not VAT registered in the UK, she could have a theoretical liability (as already noted).

This would all have been a lot easier if you'd asked the question you actually wanted answering, rather than coming with incomplete information and a half-assssed story based on a whole load misunderstandings, which I can't be bothered to correct.

Incidentally, the numbers you've quoted for Onlyfans appear to be hugely overstated, as regards both revenue and users.

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Replying to paul.benny:
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By amateurexpert
26th Aug 2019 12:58

Thanks for the comments, I got the figures for only fans off the landing page on their website. There's also another 9 sites operating this way. Due to the conflicting advice from 2 accountants and non specific feedback from HMRC I had to ask about the platform and VATMOSS rules to start with to see what everyone thinks about them acting legitimately as an 'agent'; ie; treating the relationship with their creators as a B2B supply.

Now Les and yourself have confirmed more or less this is ok I could then move on to the liability of creators facing VATMOSS.

She is VAT registered and accountant 1 said it was the platforms responsibility to account for VAT so no VATMOSS. Accountant 2 said as they act as an agent it would be her responsibility. HMRC just quoted the rules which aren't clear cut...hopefully accounting web can resolve some points.

So I believe the UK +£85K VAT registration threshold is not relevant in the case of digital services?
Once you exceed €10k then you will have to start accounting for VAT...and VATMOSS?

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Replying to amateurexpert:
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By Tax Dragon
25th Aug 2019 22:49

I suspect Paul knows more than me about VAT.

I'm not bigging him up - that's a low bar.

I can believe that the platform is providing digital services. To your friend, for one. What has that to do with your friend's obligation to charge VAT on her services?

And are you sure she's selling to the platform, rather than simply using it?

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Replying to Tax Dragon:
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By amateurexpert
26th Aug 2019 12:42

Platform is acting as an agent so she is selling to them.

Her supply to the platform is classed as a B2B so she is also obliged to add VAT as she is also 'supplying' digital services?

If these platforms did't act as a agent then VAT liability would only fall to them....this is the whole point of the discussion as unknowingly all these creators may be faced with VAT bills.

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Replying to amateurexpert:
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By paul.benny
27th Aug 2019 09:25

amateurexpert wrote:
Platform is acting as an agent so she is selling to them.

No, no, no.
You’re still fundamentally misunderstanding the roles of agent and principal.

When you sell your house, you don’t supply your house to the estate agent. The estate agent supplies agency services to you.

Likewise, you friend is not supplying anything to the platform. (How many times do I have to repeat this?)
The platform are supplying hosting, marketing and payment services, on which they must charge VAT to content creators.

Quote:
Her supply to the platform is classed as a B2B so she is also obliged to add VAT as she is also 'supplying' digital services?

Again - she supplies digital services to consumers – not to the platform.

You’ve (finally) said that your friend is VAT registered, so yes, if she has significant revenue from other EU member states, she may need to account for non-UK VAT using VATMOSS.

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Replying to paul.benny:
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By Tax Dragon
27th Aug 2019 13:27

paul.benny wrote:

You’ve (finally) said that your friend is VAT registered...

Thanks Paul. Somehow I'd missed that nugget of information. But then, I have glossed over vast tracts of this thread.

paul.benny wrote:

so yes, if she has significant revenue from other EU member states, she may need to account for non-UK VAT using VATMOSS.

Paul, on your points about the platform acting as agent, you should probably read what HMRC says about platforms. There is more to what the OP says than you give credit for.

Also, if the live webinar comparison I make below is fair (having glossed over vast tracts of this thread I can't say for certain, but the OP hasn't gainsaid), would VATMOSS be relevant?

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Replying to Tax Dragon:
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By paul.benny
27th Aug 2019 14:21

I assume you’re referring to the guidance here:
https://www.gov.uk/guidance/the-vat-rules-if-you-supply-digital-services...

I agree that “live webinar” is a good comparison – which, according to the definitions, is not an e-service, and therefore the platform provisions in that guidance don’t apply.

Would VAT MOSS be relevant? Yes. I’ve suggested that the threshold is €10,000 per member state but on re-reading, I think it may be €10,000 across all. We have a slight anomaly in that a service provider may have to account for VAT on their EU sales (through VAT MOSS) while still below the UK registration threshold.

As the lady in question is VAT registered, it’s likely be question of submitting a correction to prior returns and ‘converting’ some of her UK VAT to other-member-state VAT.

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Replying to paul.benny:
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By Tax Dragon
27th Aug 2019 14:32

Not an e-service.

That's how I see it.

So... isn't place of supply somewhere near a webcam in the UK? What am I missing?

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Replying to Tax Dragon:
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By paul.benny
27th Aug 2019 15:04

VAT 741a para 14 (paraphrased) - defines place of supply as UK if income is < €10,000

And from the notice about digital supplies, over €10,000, place of supply is where the customer is located.

Even though it's not an e-service, it's still a digital service.

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Replying to paul.benny:
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By Tax Dragon
27th Aug 2019 15:28

paul.benny wrote:

Even though it's not an e-service, it's still a digital service.

Aha. Thank you. See I knew you knew more than me! :-)

Maybe now I can get something other than pure frustration out of this thread... and I'll owe you one.

I thought "Defining digital services" then listed out "Radio and television broadcasting services" (N/A here); "Telecommunications services" (N/A) and "Electronically supplied services" - and we've just agreed that's N/A too.

So I thought... not an e-service and not a digital service.

So, same question... what am I missing?

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Replying to Tax Dragon:
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By paul.benny
27th Aug 2019 16:02

I see the difficulty.

What we're both missing is that the guidance doesn't explicitly provide for this kind of service.

It's clearly stated that live webinars are not e-services. I would argue that they're caught by the broadcasting and telecoms definitions - "broadcasting services include..."etc. As such they *are* digital services.

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Replying to paul.benny:
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By Tax Dragon
27th Aug 2019 16:23

I agree that it's not listed. But from the guidance I think the test is that there has to be 'content'. Something that anyone can look at, either because it's broadcast or because they can download it.

Despite the OP of this thread having gone on endlessly about the "creator", nothing is created. If nothing is created, if there is no 'content', then there is no digital service. IMHO.

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Replying to Tax Dragon:
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By paul.benny
27th Aug 2019 16:40

Maybe we have allowed ourselves to be directed into that particular rabbit hole. If there is indeed no digital service, it's just a regular B2C service and the place of supply follows the general rule that supply takes place wherever the supplier is located - ie in the UK. And consequently everything is subject to standard rate UK VAT.

(you're too kind, btw, saying I know more about VAT than you. You must be confusing me with Mr Howard)

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Replying to paul.benny:
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By Tax Dragon
27th Aug 2019 17:48

paul.benny wrote:

If there is indeed no digital service, it's just a regular B2C service...

I agree. Not only is VATMOSS a complete distraction. So too is any B2B "we're supplying the platform" argument.

Again, if there is no content, what is being supplied to the platform? Nothing. Just as I don't supply my telephone "platform" with content when I speak with a client. (It's not even a matter of agency - the phone platform is not my agent. Although... if I buy the additional service of the phone company timing my calls and automatically billing my clients on my behalf for my time, then I can see that an agent relationship does arise. But that's still me buying services from [not supplying] the company... ah, but you've explained that aspect already.)

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