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The key to this discussion are the words “taxable supply”. I have been a UK casino affiliate company since 2001. In the days when we were allowed to use Google AdWords, we were paying significant amounts of VAT on the advertising (it was processed through Eire at the time and incurred VAT at their rates) and obviously wanted to register for VAT in order to reclaim it.
Our accountants advised that we couldn’t register for VAT because casino/gambling-related earnings were an “exempt supply”. We knew of other UK affs who were VAT registered at the time and kept pushing our accountants to check their stance on it. The answer remained the same.
If a proportion of our income came from non-gambling affiliated programs, we would be able to register and reclaim the non-gambling proportion of our input VAT.
If PPC ever becomes a viable option again in the future, we would have to have another look at the situation. Currently, our business running costs are very small and the proportion of them attracting VAT are even smaller.
Thanks for your post. You imply that you think your accountants are wrong about this. I am sure they are wrong about this. They would be more correct if your were the casino or bookmaker. However an affiliate is being paid a commission for marketing in effect and it would be fine to register for VAT I think. As you say, many larger affiliates are VAT registered and this thread demonstrates that. Interestingly even the bookmakers have found a way to register for VAT for some of their activities i.e: the affiliate departments of the bigger operators that are UK based are VAT registered. I am not guessing. I have e-mailed them individually about this and the likes of Bet365, Blue Square, The Tote (Totesport) etc are VAT registered, certainly for their affiliate activities. So they have found a way of persuading the revenue that they can legitimately be registered. It was not always the case. Back to the more clear cut issue of affiliates – from the advice I have taken I see no problem in them being registered for VAT and I think your accountant’s advice may be faulty.
I’m doing HMR&C a favour by not registering (not being allowed to according to professional advice) because I have zero VAT outputs (I can’t charge aff progs VAT). If registered, I would therefore be reclaiming VAT each time.
This thread is of concern to me because I am now worried that I am effectively about 5 years late in registering! I will speak to our accountants again….
Thanks for your input.
