BMT and VAT?

[Jamie W]

Hello,

I'm not a company or business entity and I'm not VAT registered (nor do I need to be as I am well below the VAT threashold).

But if I use BMT as my vendor, it seems I am forced to change my customers VAT.

Am I legally oblidged to be VAT registered if I sell computer games? Or is it just BMT that need to charge the VAT, as they're well over the threashold and are in effect acting as an agent / intermediary.

This doesn't seem quite right to me, what's going on?

EDIT: Ooops! Sorry, mean't to post this in the Indie Business section, could someone move it thanks.

[Grey Alien]

I thought they take the VAT (where appropriate) as they are selling it and pay you the royalties which do not have any VAT even if you are VAT registered. It's a lot less hassley than selling it yourself and having to record + process the VAT (like I did with my framework). There may be some option to turn it off actually maybe if you are not VAT registered, someone else may know more or email them, they are pretty good at answering.

[princec]

That is exactly right.
So just don't worry about VAT.

Cas

[Jamie W]

Yep, they've been very prompt and professional and clear in their responses to my E-Mails so far!

It seems you can have the VAT option switched off, if you aren't registered for VAT.

Hmmm, I can only dream of being in a situation where I need to be registered for VAT!!

[princec]

I'm nowhere near the VAT threshold but I contacted the VAT office and asked to be registered voluntarily for competitive reasons. Worth it if you buy any electronic equipment whatsoever. Or games ("research" ). Or motorcycles.

Cas

[Jamie W]

Are you sure you're better off not being VAT registered Cas?

Think about it, say if you sell all your games at £10.

Being VAT registered means you charge the customer £11.50, and you only see £10 of that (£1.50 per sale to the govt.).

While not being VAT registered, you could sell your games at £11.50, with zero VAT, and you get the full £11.50.

I guess it depends how much money you spend on legitimate business stuff (oh and how much petrol you put in it).

By the way, BMT's response to the VAT thing..

The VAT is collected and paid through our VAT number. BMT is registered with the UK and pay VAT through them quarterly. You do not have to register. Since many vendors pay themselves or have products and sales below the threshold, we do allow you to choose not to have the VAT added for your products. If you would prefer this option, please let me know.

[DanFromFastSpring.com]

Just so you know, FastSpring E-Commerce also handles VAT for gaming and software vendors whereby we take care of everything for you.

- Dan

[Grey Alien]

I voluntarily registered for VAT years ago when I was doing IT consultancy so companies got proper VAT invoices from me (looks more pro). Also like CAS I got money off everything I bought that was related to the company. When selling games most of the money comes from US portals and VAT is not an issue so often now I claim BACK VAT when I do VAT Returns instead of paying it. However, now I'm an employee and not really buying stuff for my company I may deregister to reduce admin...

[Rickard]

Sorry for hijacking the thread, but i have a related question;
How does VAT work when you sell things online? Do you need to keep track of the VAT in each customers country, or do you simply pay VAT in the country your company is registered in (exporting)?

Regards,
Rickard

[Grey Alien]

You charge VAT at the rate of the country your company is registered in, BUT you do need to track what countries the other people are in because you should only charge VAT to EU countries, not the US for example.

[siread]

How is it that Plimus charge VAT and don't give you an option?

[Nikster]

well, you don't pay VAT when you sell something do you ? you pay VAT when you buy something.. or am I confuzled ?

[Jack Norton]

How is it that Plimus charge VAT and don't give you an option?

I think you need to uncheck the box "product is only digitally delivered". Not sure 100% though.

[siread]

I think you need to uncheck the box "product is only digitally delivered". Not sure 100% though.

But the product is only digital. Or does the purchase on CD option negate that?

[Jamie W]

well, you don't pay VAT when you sell something do you ? you pay VAT when you buy something.. or am I confuzled ?

As far as I understand..

The customer pays VAT to the retailer (or indie game-dev in our case).

The retailer collects this VAT from the customer and then pays it on to the VAT man (i.e. the government).

That only happens it the retailer is registered to pay VAT.

The retailer has to be VAT registered if their income is over a certain limit (in UK I think it's around £55k per year).

You can also register on a voluntary basis, if you're below the limit; but, it's a lot of extra paper work; and in a lot of cases, the net effect would be that it's going to cost you more money to be registered ...

... unless your customers are also VAT registered businesses (they can claim back VAT on purchases from you) and you buy lots of stuff for business use where you can claim the VAT back.

So for us indies, I don't believe it's a good thing to be VAT registered, unless you earn too much money, and HAVE to be registered (in which case you're laughing anyway) or your income / expenses differential is such that the VAT man pays you money.

Hope that clears everything up (hehehe).

[Adrian Cummings]

Thanks that was worth knowing with regards to BMT.

The current UK VAT threshold is about £67K I think?

I just asked ClickGamer the same question also.

[siread]

According to my accountant, because Plimus/BMT take the payments in their name then they are required to charge the VAT. So why would Plimus/BMT allow you to disable the VAT option?

[Jack Norton]

According to my accountant, because Plimus/BMT take the payments in their name then they are required to charge the VAT. So why would Plimus/BMT allow you to disable the VAT option?

Yes, same here. I didn't want to have that extra burocratic stuff so I didn't even bother, but what they told me, is basically that since they sell directly I can't claim VAT in their place. Probably is different for people living in USA, but for EU I think it should apply even to UK guys.

[princec]

If you are VAT registered you can give BMT your VAT registration number and they will instead pass the VAT back to you so you can process it normally. I haven't bothered yet, though I should. At least, this is what they said at the time I think.

Cas

[Jamie W]

According to my accountant, because Plimus/BMT take the payments in their name then they are required to charge the VAT. So why would Plimus/BMT allow you to disable the VAT option?

Because you're accountant doesn't full understand the situation re: BMT .. and perhaps also Plimus?

[Grey Alien]

unless you earn too much money

lol, there's never *too* much ;-) Seriously though if I get a huge Tax bill then I should be happy because I'll have made loads of money right?

[Nikster]

I'm still confuzled, VAT isn't a set rate across the world is it ? so who pays what and who declares what ? I'm guessing that price you show is inclusive of VAT ? but if someone from the US buys your game, do you have to use the UK VAT price ? or does the VAT get applied to your display price ? sure I saw it on plimus if anyone from area X buys something from me they get charged an extra xxx..

argghhhhhh bad day for me

[Jack Norton]

Because you're accountant doesn't full understand the situation re: BMT .. and perhaps also Plimus?

Depends how you consider it. BMT is the vendor right? you don't sell DIRECTLY to the end user. You don't get the money instantly in your pocket.
Otherwise, you should pay vat even for portal sales, no? that's what I understood when I spoke with my accounant. In any case the safest solution was let Plimus/BMT handle VAT for me.

[Jamie W]

I thought that too Jack, and I specifically asked BMT if that was the reason VAT was being added on to sales. It seemed not to be the case. Though I may have misunderstood their position.

[Adrian Cummings]

BMT turned off my VAT charges also on request.

I guess I am still little confused tho myself to be honest :P

[siread]

I'm still confuzled, VAT isn't a set rate across the world is it ? so who pays what and who declares what ? I'm guessing that price you show is inclusive of VAT ? but if someone from the US buys your game, do you have to use the UK VAT price ? or does the VAT get applied to your display price ? sure I saw it on plimus if anyone from area X buys something from me they get charged an extra xxx..

argghhhhhh bad day for me

Not sure about BMT but Plimus gives you the option to absorb the VAT price. That means they charge it where applicable (EU) but take it out of your share of the revenue. If you don't absorb it then the price gets bumped up at the checkout.

I was playing it safe like Jack, letting Plimus charge VAT (and I absorbed it). Now I'm wondering if I should disable the VAT charge completely - if I'm not VAT registered then surely it's Plimus' lookout if it's legal, no?

[Nikster]

That's my point though, Plimus is a US entity so would people pay VAT from the UK for instance ? even though I myself am in the UK, as Jack said, the money goes to Plimus and not directly to me.

[Jamie W]

That's my point though, Plimus is a US entity so would people pay VAT from the UK for instance ? even though I myself am in the UK, as Jack said, the money goes to Plimus and not directly to me.

It's a pretty darn good question if you ask me; certainly something you'd want to be crystal clear on..

Where exactly does the money go (that's collected as VAT)?

[Adrian Cummings]

This is what ClickGamer UK said regards VAT...

"The BMT micro thing sounds odd -- as BMT are collecting the payment then it is their VAT position that needs to be considered."

"Of course, they will be above the threshold, so they will need to add VAT for UK/EU customers. The option to not levy VAT (as you are below VAT threshold) should not be an option I'd say?"

Personally, I now think the VAT should actually be back on via BMT :P

[Jamie W]

Well, what about selling things through PayPal; obv. they also collect the payment and are above the threashold; so why are payments collected via PayPal not adding on VAT?