UK Clickbank Merchant - Don't Want to Pay VAT Twice

by Ruka

Posted: 13 years ago 16 replies

INTERNET MARKETING

Hi, I was wondering if anyone has experience with this.

I am UK based and thinking of using Clickbank as my payment processor.

As you know Clickbank charge VAT for all EU transactions, and pay the governments directly.

Also, the UK government requires that we pay them VAT on the e-book sales we make, once our earnings are over £70,000 (2010). This is on top of other taxes, whether trading as sole trader or Ltd company. Once you go over £70,000 for any year, you have to become VAT registered.

So I would have to pay VAT to the government - but it would have already been paid by clickbank.

Does anyone know how this works? (I emailed clickbank and asked if I could opt out of the VAT they pay and take care of it myself - but this is not possible, as in effect, Clickbank become the ebook seller, not me).

Should I write in my business description for the UK government something other than "ebook publisher", and instead have something like "advertiser" paid by Clickbank?

I know I will get an accountant opinion on this before doing anything, however it would be helpful to know how anyone else handles it.

Many thanks

#clickbank #merchant #pay #vat

Frank Donovan 13 years ago

Once you become VAT-registered, you can claim back any VAT you've already paid on products and services related to your business.

But it's definitely a good idea to leave all VAT calculations to your accountant - just be sure to keep all the records.

Frank
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Ruka

13 years ago

Thank you Frank!

Now, that makes sense to me if I am buying certain products and services for my business.

What about when I am the merchant, selling products. In this case, Clickbank legally own my product and sell it for me.

Are you saying I can claim back VAT that Clickbank already paid?

I think that's what confuses me a little, how the tax department would be happy for me to claim back tax for myself, that another company, clickbank, has already paid as part of a big bundle of tax payments.

Thanks
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Dan Bainbridge

13 years ago

I am based in the UK. I was worried about VAT calculations too, but you don't have to worry at all, you don't have to pay any VAT on sales made with Clickbank.

I asked my account manager and this was passed onto the Clickbank accounts team, who came back with this:

Originally Posted by Directly From Clickbank Accounts Team

Hello,
Publishers are not required to file any returns with the EC for sales made through ClickBank. ClickBank, acting as the retailer of your product or service, must comply with the Directive. We handle all compliance requirements. We determine if VAT applies, and at what rate. We then collect the tax, file a return with each of the countries in the EC.
I hope that answers your question!

Thanks

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Exfilius 13 years ago

No, you can't claim back the VAT from your ebook sales.

Clickbank sells the ebook on your behalf. They are the ones who handle the transaction. You are just an advertiser/affiliate even if it's your product.

Just tell the tax man that you are a commerce agent aka affiliate, and that you don't sell anything.
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zorus 13 years ago

so clickbank act like your accountant, interesting
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- Ruka 13 years ago
  
  Originally Posted by zorus
  
  so clickbank act like your accountant, interesting
  
  No, they don't act as your accountant.
  
  You will still have to pay Income Tax!
  
  Thanks
  
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Ruka 13 years ago

I see.

So, even when making over £70,000 - I should not register for VAT.

Because am I not "selling goods or services" in the eye of the taxman, instead I am receiving an income from Clickbank.

And I can call myself an "advertiser" as my description of business.

Am I thinking right?
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- Frank Donovan 13 years ago
  
  Originally Posted by chickenlittle
  
  So, even when making over £70,000 - I should not register for VAT.
  
  Are you selling your products exclusively through ClickBank? In any case, you ought to be able to treat your CB sales as you would any other non-EU sales for VAT purposes.
  
  I don't sell any products through CB, but if I did, I'd get their terms regarding VAT status in writing and run it by my accountant.
  
  Frank
  
  Thanks
  
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KirkMcD 13 years ago

Originally Posted by Chris Kent

Clickbank are the legal seller.

Exactly. If you read the contract, you will see that you are selling your ebooks to Clickbank wholesale. They are your customer.
The people who actually buy the book are CB's customers.
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- Jeff Henshaw 13 years ago
  
  Personally, I would visit:-
  
  HM Revenue & Customs: Accounts and records for your VAT
  
  Or:-
  
  HMRC Contact us
  
  Otherwise telephone the VAT Helpline on 0845 010 9000 (between 8:00 am and 6:00 pm Monday to Friday).
  
  Regards,
  Jeff.
  
  Thanks
  
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Sansfaim 13 years ago

If you were registered for VAT, you probably wouldn't have to pay any in your circumstances.

However, you could claim back any VAT you spent in support of your business. e.g. new computers, software or any general expenses that you incur in the running of your business on which you paid VAT.

I was in this position for many years and got a cheque every quarter from the VAT man.

Cheers

Sandy
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Ruka 13 years ago

Thanks all. This will be helpful if I decide to move over to Clickbank, makes it easier when talking to my accountant.

UK ebook sellers/WSO sellers using paypal or another non-Clickbank payment processer would have to charge VAT to their customers and pay it to the government - but only once their turnover exceeds £70,000. Apart from VAT, tax for a sole trader is pretty simple - you just pay income tax on your earnings to HMRC, and you have to complete a tax return as soon as you start earning.

Chris, I doubt Clickbank would charge the VAT money and run! They would be breaking international tax laws, risking fines/jail.

People selling electronic products world wide do not have to pay tax to many governments - only to their own government.

It does look like the area of Clickbank sales and when to register for VAT is not straight forward:

http://www.accountingweb.co.uk/anyan...internet-sales

Accountants love all this kind of stuff, so I shall pass this over to him. Over n out

Sansfaim, good point about the extra we can claim back when we register for VAT. Nice when we get a check rather than having to write one!
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Nisip Banned 13 years ago

But what happens with all VAT when a refund is made?

Is the VAT returned to the buyer also?

Or the VAT is lost forever, taken by the governemnt even for transactions that were refunded?
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- Alexa Smith Banned 13 years ago
  
  Originally Posted by chickenlittle
  
  Sansfaim, good point about the extra we can claim back when we register for VAT. Nice when we get a check rather than having to write one!
  
  Yes, this is quite right. You'll have to register for VAT when your turnover reaches the threshold, and you don't have to pay VAT on your Clickbank sales, and you can claim VAT on your business expenses, and if that's your only source of income it's certainly possible that the VAT-man will be a net contributor to your business.
  
  Originally Posted by Nisip
  
  But what happens with all VAT when a refund is made?
  
  Is the VAT returned to the buyer also?
  
  Yes, it is.
  
  Thanks
  
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UK Clickbank Merchant - Don't Want to Pay VAT Twice

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