VAT camp 22 Aug 07

This could well be *the* dullest subject to blog about - but since there always seems to be a fair amount of confusion over VAT (Value Added Tax) and to whom it should be charged, especially when selling goods or services internationally, I thought it would be useful to explain how we’ll be implementing VAT into our payments system for Brightbox.

No? well ok, don’t worry. But if you’re interested or have nothing to do, read on…

In simple terms, VAT is a sales tax (17.5% in the UK) collected on sales and paid on purchases with the balance paid (or reclaimed if negative) to HMRC. Sounds simple, huh? Not really. In fact it’s seemingly impossible for even qualified accountants to keep up with the innumerable rules, exclusions, special exceptions and so on which make up the law on VAT.

Even greater confusion occurs when it comes to selling goods or services internationally. As a VAT registered business in the UK, it seems we have to treat sales to customers in the following regions/categories differently:

• UK-based customers (businesses and individuals) = VAT is added
• EU countries (individuals and non VAT registered businesses) = VAT is added
• EU countries (businesses with VAT registration number) = VAT is not added
• Non-EU countries (businesses and individuals) = VAT is not added

I’m (thankfully) no expert, but based on what I’ve read and advice from our accountant - this is how we’ll be incorporating VAT into our payments system.

Thanks for reading :)