Sedo & VAT

[paul]

I'm VAT registered and therefore have to pay VAT on any name I sell including via Sedo.

What I don't know is does the buyer know I'm VAT registered and do they get a VAT invoice so they can claim the VAT back.

For example:

I just sold a domain for £2,000 - £200 (sedo commission) = £1,800

£1,531.92 + £268.08(vat) = £1,800

If the buyer can claim the vat back then they are only paying £1,731.92

Has anyone bought a domain via Sedo from someone who is VAT registered, and if so what was the invoice like?

 

[olebean]

Paul

I think you will find the vat is on the gross sedo amount not net of sedo commission...

I don't think the invoice structure matters as long as it complies with uk regulations ie vat no. date etc

 

[bb99]

Hmm.

I think the answer to this one is that "it depends on where your buyer is".

If you and your buyer are in the UK and they pay £2k then your sale is for £1702.13+VAT (= £2k). You would treat Sedo's commission as a cost (rather than a reduction in your sale price). If your buyer requests one, you should supply a VAT invoice for this amount.

If you're in the UK but your buyer is in Australia then, this time, your sale is actually for £2k+VAT but in this case you don't need to add on the VAT (because the buyer is in Australia). Again, you then treat Sedo's commission as a cost.

I think that's right anyway

 

[paul]

This brings up several points:

1. I never see the £2,000 so why should I pay vat on the whole amount (I'm sure you're both right though)

2. I'm either paying more than 10% commission to Sedo or they are charging commission on the vat.:???:

3. Should I inform the potential buyers, during negotiations, that I'm vat registered and therefore they can claim part of the cost back if they too are registered, this could have a significant effect on the final price achieved for the domain. £2,000 + VAT sounds much better than £2,350 to someone who is vat registered.

 

[bb99]

1. I never see the £2,000 so why should I pay vat on the whole amount (I'm sure you're both right though)

Think of it like receiving a PayPal payment... You receive £100 via PayPal but you only end up with (eg) £97 in your PayPal account. You did actually receive £100 but at the exact same time, PayPal charged you £3 for their trouble.

VAT is an utterly shite and pointless system. It just serves to complicate things for businesses and make money for accountants.

2. I'm either paying more than 10% commission to Sedo or they are charging commission on the vat.:???:

I suppose the proper answer is that they charge commission on the cash price paid by the buyer.

It does raise an interesting question though as the actual commission rate as a % of the sale price depends on the VAT circumstances of the buyer/seller. So 10% commission is not 10% commission if the seller is VAT registered and sells to another UK VAT registered entity.

3. Should I inform the potential buyers, during negotiations, that I'm vat registered and therefore they can claim part of the cost back if they too are registered, this could have a significant effect on the final price achieved for the domain. £2,000 + VAT sounds much better than £2,350 to someone who is vat registered.

Yes I certainly would do so.

 

[netserve]

1. I never see the £2,000 so why should I pay vat on the whole amount (I'm sure you're both right though)

You sell for £2000 so it's either plus vat or it includes vat.
The sedo commission may or may not be vatable, if it is vatable, they should give you a vat invoice on which you can recover the vat.

2. I'm either paying more than 10% commission to Sedo or they are charging commission on the vat.:???:

I'd guess they're charging commission on the final price, and the final price includes vat.

3. Should I inform the potential buyers, during negotiations, that I'm vat registered and therefore they can claim part of the cost back if they too are registered, this could have a significant effect on the final price achieved for the domain. £2,000 + VAT sounds much better than £2,350 to someone who is vat registered.

Agreed.

I'm a Chartered Accountant, but this has got me thinking if domains should be treated as capital assets or trading stock. It doesn't change the vat position but it does have a bearing on the income/capital tax position.

 

[Ellis]

I bought my first domain thru sedo yesterday - and I wish I hadn't due to this problem - and the ridiculous cost and agro of send the swift payment to Germany within 5 days - is this 5 working days, 5 standard days - what about the bank holiday on Monday - What about the bank holiday Today in Germany - how does this work?

I havn't a clue - So I have to pay super swift transfer in 2 days

Why I can do a direct transfer to sedo in the UK or even drop the money into their office, I don't know.

Anyway

purchase price was £1800

All sedo's bumph says that all costs and vat are included.

After purchase, I get an email to follow a link saying " you are registered for VAT therefore you must pay vat on this purchase"

The invoice is only £1800 flat - to be paid to an account in Cologne.

I, like anyone else, can afford to take any risks with vat - unless you want to spend 18 months at Her Majesty's - so I now need to take advice as to what to do, which is going to cost extra.

What happens when I sell the domain - do I have to charge vat? - it doesn't look like I've paid vat - I've no bill to say so.

Do I pay vat on the purchase? - do I declare the purchase as vat'able on my next return?

This system isn't good, its' not simple and it needs looking at - asap

 

[bb99]

After purchase, I get an email to follow a link saying " you are registered for VAT therefore you must pay vat on this purchase"

Who was the email from - Sedo or the domain seller? Also is the domain seller based in the UK?

What happens when I sell the domain - do I have to charge vat? - it doesn't look like I've paid vat - I've no bill to say so.

If you are VAT registered and you sell the domain then yes you have to charge VAT on the sales price.

 

[Ellis]

The domain seller is in Wrexham - and it's not Rob!

If I didn't claim vat back when I bought it - why do I have to add vat when I sell it

The whole thing is unclear!

Thanks bb but I doubt all this is legal

PS my family are all accountants - but they still get dubious about all this and I still don't get free advice

 

[bb99]

If I didn't claim vat back when I bought it - why do I have to add vat when I sell it

If you are VAT registered and you make taxable supplies (ie if you sell stuff that is VATable) then you MUST MUST MUST charge VAT on it. That's the law!

Going back to your specific purchase, Sedo rules say that any price negotiated through Sedo includes any VAT if the domain seller is VAT registered. If your seller is VAT registered (which I suppose they must be if they are asking you for VAT), you have therefore paid £1800 for the domain name, which comprises £1531.91+VAT. It sounds to me like the seller is in the wrong - they should be invoicing you for £1531.91+VAT.

 

[netserve]

If you are VAT registered and you make taxable supplies (ie if you sell stuff that is VATable) then you MUST MUST MUST charge VAT on it. That's the law!

Thats great, now tell me in less than 5000 words what a taxable supply is, and no it's not stuff that is VATable, but could you tell me what is VATable?

For a bonus point, how many rates of Vat are there in the UK?

 

[bb99]

Thats great, now tell me in less than 5000 words what a taxable supply is, and no it's not stuff that is VATable, but could you tell me what is VATable?

For a bonus point, how many rates of Vat are there in the UK?

I'll cop out of answering the first question and say that a taxable supply is one that is not otherwise exempt or zero rated.

There are three rates of VAT in the UK - Zero, 5% and 17.5%.

 

[ELIFE-MZ]

I am no Accountant and never purchased anything thru Sedo. Sold a few in the past and asked my Accountant the same question. When selling a domain, the invoice has to be the final sale price and Sedo commission should be treated as a cost.

Which means that by the time the VATman and Sedo have finished with you, a £1000 sale actually leaves you around £750. If you purchase something via Sedo then I guess you should ask the seller to send you a VAT invoice and claim it back. Buying from overseas sellers is another matter.

MZ

 

[Jeewhizz]

If you invoice someone outside the EU, then you don't need to charge the VAT

 

[olebean]

Thats great, now tell me in less than 5000 words what a taxable supply is, and no it's not stuff that is VATable, but could you tell me what is VATable?

For a bonus point, how many rates of Vat are there in the UK?

An interesting point:

Equally on sale, was it conducted outside the uk or inside the uk...

Which ever way you look at it, if you have experenced a VAT investigation its worth appearing to have kept your nose clean!

Interesting solution maybe, invoice the client as originally suggested, leaving out Sedo fees. If the client asks why you didnt include them, inform them that Sedos fees were their responsibility.... suggest they get an invoice from Sedo or whoever