Tax in the UK

Hi

Just wondering how people deal with this.

Basically I will be selling elearning courses online using amember. Everyone in the UK pays 20% TAX

People outside the UK also pay TAX

People outside the UK who are in an organisation dont pay TAX

Is anyone selling from within the UK online to the World digital products? Any advice would be good on how its set up in aMember 4... At the moment I just have 2 forms, one tax and the other non tax.

Thanks

Dan

Hello Dan,

Yes, I'm UK based, charging membership for access to PDF downloads and videos. 80% of my customers are in the US. My turnover has been small during development so I have opted to just pay the VAT for all transactions until I can sort this out.

I use PayPal and I'm not at all sure if the origin of the transaction is returned by PayPal. In fact I'm not at all sure that it is possible to identify the origin if you do not have a physical delivery address. Last time I enquired at the tax office it was suggested I should carry on paying for everyone.

I would be interested to know how you are dealing with it. You can certainly separate the non UK/Europe customers in aMember if you have an address entry but the UK Tax office won't take this as evidence of transaction origin (at least that is how I see it).

I haven't researched this thoroughly up until now but I'm not that comfortable about volunteering all that tax as my income is growing fast.

I would be interested to know how you are identifying your non tax customers.

Regards
Angela

Thank you Alex, this is good news!

Is this what I meant though? Our problem is the customers who want to claim the VAT back or not pay it. VAT will always be 20% so this is not a problem everyone in the world will pay this wont they because in the UK its 20%?, Unless they are in an organisation. With e-learning, its being delivered in their country.

At the moment I have 2 signup forms, one for paying VAT and one for not paying VAT, the user that is outside the UK and with an organisation clicks the non VAT button and goes to the non-VAT form. This is not ideal really because anyone could click this button and just not pay VAT so we need a way to confirm they are with an organisation.

I have no idea if im getting this right... I originally thought we charge everyone VAT and they just claim it back through their organisation on their own, but ive been told that it doesnt work like this for online learning.

Still confused!

I have just phoned the UK vat office for a ruling. He really only told me what I already know. He directed me to this very useful link - try finding it yourself!

http://customs.hmrc.gov.uk/channels...PROD1_029955&propertyType=document#P234_30705

Para 17 Use and enjoyment of Electronically Supplied Services

and especially Para 19 Evidence of Customer Location.

I am only concerned with sales to private individuals although I have had requests for vat invoices. The main issue I see is whether PayPal returns a customer location and how amember uses the information. I certainly want to avoid needing to know customer's postal address for their transaction which could be a deal breaker!

On PayPal under Profile, Selling Preferences you can set up VAT and all the EU regions. Is this what we need to do? Does PayPal add it to your price or calculate it as part of the price?

Same in Amember, you set up VAT and the regions. Same thing, does it add it to your product price or calculate it as included? And does aMember take Region from customers country entry on signup which won't do as far as the UK VAT office.

I am phoning PayPal but it is harder to get to chat to a human there so I hope Alex can guide us on this. I have done a fair bit of research via google on identifying location and generally speaking no one seems to agree.

I hope I'm not alone in not understanding this issue.

I don't have all of the answers but some of this may help - i hope.

Generally speaking you will need to know the country the purchaser lives in before you send the buyer to any payment processor. (We can't just focus on what PayPal does).

To complicate the issue with UK VAT rates the Channel Islands and Isle of Man are exempt from VAT and there are services/products that can be zero rated. Also there are differing VAT rates across Europe.

Each product would need to be identified as VATable or Zero rate.

In one OS shopping cart this was handled using the Shipping Zones (Country) which were selected from a drop down at the time the user account was created. Using this method a config file of VAT rates can be attached to each country to determine if VAT is charged or not.

The sellers VAT number needs to appear on the invoice, a buyer needs to be able to input their VAT number which can then be checked as valid at http://ec.europa.eu/taxation_customs/vies/ and the price adjusted accordingly (if you are registered for VAT and can prove it the seller doesn't need to collect the tax).

HTH