USA - Canada Website - VAT / no VAT ?

[DSLiverpool]

I have only ever sold stuff not sold virtual stuff like a website, my accountant needs to ring people up to check (!) but I thought I would ask a quick question. Its Canada and Texas if that helps

Cheers

[Eric Mc]

https://www.gov.uk/government/publications/vat-sup...


https://www.gov.uk/government/publications/vat-not...

[DSLiverpool]

Thanks Eric - my accountant still has not got back to me!

[akirk]

When we clarified this with HMRC their method of judging was simple:
- look at the audience for the website
- if the website audience can be seen to be held geographically outside the VAT region (e.g. a website for local mums to meet up in Texas - no relevance to anyone outside that area) then no VAT
- any potential that the audience may be within the VAT area at times - VAT must be charged...

on that basis we charge VAT

[Eric Mc]

And when you say "no VAT", does that mean -

Zero Rate VAT?
VAT Exempt?
Outside the Scope?

In VAT rules, the concept of "no VAT" does not exist.It must fall into one of the above three classifications.

[Simpo Two]

I'm led to believe that the title of 'zero rate' is a little insidious, in that it enables the Chancellor to whack some future VAT onto it more easily...

[Eric Mc]

Partially that.

However, it's more to do with fudging basic EU VAT rules which states that certain goods and services cannot be excluded from the VAT system. So, by Zero Rating, it is included, but with Zero Percent applied.

[akirk]

Zero rate simply means vatable but vat charged at 0%
So you can reclaim input vat
Nothing new can be zero rate under EU laws so we are stuck with the current list hence the current arguments about tampons... the original structure was based on various factors such as deciding whether something was healthy or not / luxury or not, hence the difference between cakes and biscuits - cake seen to be home made, biscuits seen to be shop bought and luxury etc...
All zero rated still goes through the books for accounts and for vat records...

Exempt means that you don't charge vat, and equally you can't reclaim input tax... if all you deal in is exempt then you can't register for vat

Out of scope is limited to various oddities and stuff bought and used outside the EU... e.g. Congestion charges / charity giving etc. in the UK

Edited by akirk on Thursday 24th November 20:54