Voluntary VAT registration for self published authors
Many of our self published authors get the majority of their income from Kindle Direct Publishing (KDP). From a VAT perspective this is treated as a business-to-business sale and takes place where the customer (KDP) is based. It is outside the scope of UK VAT and therefore there is no requirement to register for UK VAT – even if sales to this source exceed the VAT registration threshold – currently £85,000.
It is possible for an author receiving royalty income from KDP to voluntarily register for VAT in the UK.
Advantages
- As a VAT registered business you can recover VAT on the things you purchase for the business.
Examples would include:
Amazon advertising fees – were these are charged by Amazon UK
Accountancy costs
Purchase of equipment like PCs and laptops
The amount of VAT you can recover will depend on your spending habits but in some cases it can be thousands of pounds. - You can recover VAT on services in the 6 months before registering and on assets you still use in the business bought within 4 years. You’ll need to have the paperwork to support your purchases.
- Some overseas suppliers of services will add their own country’s VAT to services they provide to ‘consumers’ overseas. If you are able to show you are a ‘business’ rather than a ‘consumer’ then they won’t charge VAT on their service. Many companies use the UK VAT Registration Number as their proof that a customer is a business. In practice, we find that there are businesses that shouldn’t be getting charged overseas VAT suffering this charge because they are unable to complete the necessary information to prove they are a business.
Disadvantages
- If you are VAT registered then it is the whole ‘person’ that is VAT registered – typically you or your limited company. If you make other sales. in addition to KDP. then you would need to charge VAT on those sales. If your customer is not VAT registered then you may have to reduce your price to allow for the VAT you will have to charge.
- Being VAT registered is another responsibility to comply with. There are fines and penalties for being late with VAT returns or paying VAT.
- You are more likely to have a VAT compliance check from HMRC than you are to have a tax enquiry into other taxes.
- You’ll either have to complete your VAT return yourself (more hassle for you) or pay an accountant to do it. You’d need to decide if the VAT you are recovering each year tis worth the additional accountancy costs.
Like many areas of tax there isn’t necessarily a right or wrong answer and we work with our clients to come up with the right solution for them and their circumstances. Our VAT for Authors Guide has some further information.
