Tax Rant

First off, this is not being posted so I can get a lot of sympathetic comments or suggestions that I’d be better off living in the US (or Panama). I know I’d be better off in the US and I don’t need the sympathy, really. I just want to get this off my chest and maybe provide a cautionary note for anyone else who might end up in this position. If you actually know something that might help, please comment.

Second, this might get lengthy. Feel free to ignore my moaning and tldr. Aside from a comment about how it’s affecting my work, this is not about books.

So, with all the glorious fun we’re having with the Panama leaks and all that, tax is something of a hot button topic. Everyone seems to be ranting and raving about rich people avoiding tax payments. Everyone hates all these large companies who avoid paying tax in various countries by exploiting the laws the people we voted for set up. I have to say that I cannot blame them, any of them, even if I think they should be paying their due.

I am not rich and I highly doubt I ever will be. Every time I think I might make some money, someone in a government office seems to decide they need it instead. I quit my day job to write full time because the income from the two jobs was high enough that I ended up paying out about what my day job was giving me in additional taxes. What was the point in working a 16 hour day (8 hours in an office and 8 writing at home) when the end result was that I only really got paid for half my time? Why not quit the job I alternately hated and disliked, and do the one I liked doing full time? So, no more day job and my tax bill for the tax year just gone should be significantly lower. Great.

And then I get a letter telling me that I have to have an interview with a man from the HMRC (that’s the IRS for you guys in America) about Value Added Tax. I had not even considered the possibility of needing VAT registration. I, as an entity, do not sell anything. I provide my books to entities who make them available for retail purchase, and charge VAT (or sales tax, or whatever) appropriately. The EU has made all that increasingly difficult over the last little while, apparently out of a desire to make sure the small business they say they wish to promote fail, but it wasn’t a concern because  retailers handled that. But today I had a telephone interview involving a man asking questions and me becoming increasingly angry and frustrated the more he went on.

It seems that the government wants VAT payments from me, for services which I have not charged VAT for. Probably a fairly large amount of money is involved and, knowing how this works, additional charges for not paying it earlier. (To be fair to the HMRC, if they overcharge you, they actually pay quite a good rate of interest when they give the money back. It’s better than savings rates anyway. But they do like making you pay for your mistakes.) As far as I can see, this leaves the government getting two VAT payments for the sale of the same items (books), and me losing a lot of money. Nice for MPs’ expense accounts, not so great for me.

The only hope I currently have is that Amazon KDP and Smashwords are both US companies, so this may count as an export and be zero-rated for VAT, thus negating the problem. I’m looking into that and getting nowhere with the legalese. Maybe only EU sales apply, then I’d be under the limit for registration and it wouldn’t be an issue (the US is by far my largest market, and thank you guys for that). No decision on all this has been made, and I may be worrying over nothing, but it’s coming on top of a load of other personal crap which I have to worry about and it’s just about the last straw.

It seems like, for all the rhetoric, the last thing anyone in the UK wants is for someone to be successful. We penalise success. I was hoping to get Frostburn wrapped this week and move on to the new Fox book, Emergence (that’s the working title, btw, it could change). Right now I’m not feeling very creative. The thought of jacking it all in has crossed my mind. Don’t worry, I won’t. I doubt I could if I tried. This is going to delay things while I sort it out (in my head as much as all the paperwork I’m being asked to provide).

If you got to this paragraph without giving up: thank you, I actually feel better for writing it down. Hopefully I’ll provide an update to this post giving good news about how it all turned out okay, or not. If you find yourself writing books in the EU and having some success at it, I suggest you consult someone regarding possible VAT issues. If you’ve already met this, I’d love to know what happened.

Once again, thanks for letting me rant at you. Have a much better day than I’m having,

Niall.

PS. The musical accompaniment for this post is Meatloaf’s Life is a Lemon and I Want My Money Back. YouTube link provided.

 

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22 responses to “Tax Rant

  1. And crap like that is why people in the US scream about big government and a tax code professionals cant fully understand. I can understand your frustrations, to an extent, with the situation. About 6 years ago my mothers small business went from supplemental income to full time in about 6 months. Soon after, I left my crappy job and went to work for her. I dont deal with the books, but I definitely get to hear about it during tax season. Finally she just decided to hire a tax professional. Lots of problems went away, and we ended up paying a bit less in business tax…admittedly that just went into paying the guy, but in the end it was zero cost for us and fewer headaches. No idea if something like that is a viable option for you, but a conversation with a professional could be a good idea. At the very least they could translate. Also, cant hurt to reach out to any small business advocacy groups in the UK for advice.

    P.S.
    Just because I have to…you could always move to the US!

  2. Doesn’t the UK have a graduated income tax in the same way America does?

    Anyway, some random googling led me to this, which I’m sure you’ve already seen but in the off chance you haven’t:

    >>>
    Hi — if you are selling on Amazon via KDP (or any other third party such as Apple’s iBooks) they are responsible for collecting the VAT and it’s wrapped into the price your book shows at. In the case of KDP you will see this when you choose the price of your book and the VAT rate varies by country of sale. You only are responsible for charging and collecting VAT on ebooks if you sell them direct yourself rather than through a third party – and (from what I recall) only if using automated systems to make and fulfill those sales.

    “As I understand it the royalties paid from non UK based Amazon companies are outside the scope of UK VAT and so you will leave them off your VAT return.

    So you simply set the price for Amazon and they pay you the Royalties. The Royalties are supplied where the customer is and so the VAT rate is defined by their location. The VAT aspect is that they charge 3% on supplies from Luxembourg rather than 20% from UK which you would have to charge if you supplied direct to your customers.”
    >>>
    https://kareninglis.wordpress.com/paying-uk-income-tax-on-book-royalties-uk-authors/

    • Yes, they do have a graduated scale, it’s just basically higher than the US one.
      Thanks for that link. Let’s see if the nice people at HMRC agree.

      • More comment spam:
        According to this link: https://kdp.amazon.com/help?topicId=A30XCAGX3E5QDC amazon pays royalties on pre-vat ebook prices which means they’re collecting the vat separately from the monies being paid to you (monies sounds very british doesn’t it?)

        That’s reinforced by the comment:
        “Edit 3/12/14. In the last couple of days people have reported letters from Amazon confirming that it will be taking care of the VAT for Kindle ebooks. It is going to change the way pricing is set – I think you set a VAT-inclusive price for purchasers in a store’s home country (eg 20% on Amazon UK), and purchasers from elsewhere will get a price adjusted for their home VAT rate.”
        From: http://wordsthatchangetheworld.com/2014/eudigitalvat/

        This page: https://www.writersandartists.co.uk/writers/advice/163/after-publication/rights-and-legal-advice/finances-faq presents a slightly different take:

        “Where the writer’s self-employed income (from all sources, not only writing) exceeds £73,000 in the previous 12 months or is expected to do so in the next 30 days, he or she must register for VAT and add VAT to all his/her fees. The publisher will pay the VAT to the writer, who must pay the VAT over to the Customs and Excise each quarter. Any VAT the writer has paid on business expenses and on the purchase of business assets can be deducted. It is possible for some authors to take advantage of the simplified system for VAT payments which applies to small businesses. This involves a flat rate payment of VAT without any need to keep records of VAT on expenses.”

        This seems to slightly contradict the other articles on the subject, but as for your specific case the two relevant details appear to be A) the total self-employed income threshold and B) the language about “publisher pay the VAT to the writer”, which sounds slightly odd but since I assume amazon isn’t sending you VAT payments you’re probably in the clear there. Also I’m pretty sure no one in the kindle publishing world is charging amazon VAT or getting it sent to them.

  3. p.s. How much extra do I have to pay to get ultrahumans4 early?

    • It would several billion dollars to invent a time machine, send me back in time with the manuscript, and give it to my younger self so I can get it to my proofreader early. The development times might be a bit excessive, but at the end you’ve got a time machine, so that’s not a problem. 🙂
      And thanks for the laugh. I’ll get it out as soon as I can.

      • Heh, time machines. Over in America land we’re working on the theory that Trump isn’t going to win the election because a time traveler would have already come back in time to prevent it.

        On more unrelated notes, two questions:

        One) What’s up with the size of the high-heels in your books? I mean, yes they’re genetically modified superior beings/androids/whatevers and they can wear whatever they choose to, but like, 6 inch heels are insanely high. I’ve always wondered if you actually meant 6cm heels?

        Two) What was up with the Mink secret identity story line? (Sorry for the spoilers, Mink does in fact have another name!). It was just weird.

      • Frequently, the 6″ heels come with platforms. I may or may not mention this.
        Not sure what you mean about Mink, but I’d rather not go into here. Spoilers and such. If you posted a question with a little more detail to Goodreads, I could answer and mark with spoilers.

  4. You’ve probably already thought of this but I’ll ask anyway, have you considered consulting a professional accountant? Going by google there are a bunch who at least advertize specializing in handling the accounts for “Authors Scriptwriters and Journalists”.
    No idea how good or reliable any of these are buthttp://www.jonathanford.co.uk/specialities/accounting-for-writers/?gclid=CJndzKn5r8wCFa0V0wodWfULpw is the first entry I got on google search.

    I know you said not to point out you should move to the US or something, but have you considered Ireland?
    http://www.revenue.ie/en/tax/it/reliefs/artists-exemption.html

  5. IF you dont want to move the US, we in canada will make a home for you =)

  6. I’ve been a small business owner in the US for about 15 years now. One bit of advice an old timer gave me before I made the switch from employee to boss/bill payer/chief bottle washer was to “stick to what I know best and hire professionals to do what they do best” … Namely, hire a good accountant and have a trusted lawyer on retainer.
    I’m very good at what I do – which has nothing to do with accountancy or the law, (wait, that makes me sound like a criminal). I’ve never actually ran the numbers, but I’m sure that those pros have saved me more in time and money than they’ve cost. Not to mention kept my blood pressure and stress in check.
    And kept me out of jail.
    Always a plus.

  7. Ok, I’m bored of tax discussions can I have Frostburn now? Tia

  8. New to this board so without having to go back. Thaumatology books were a nice blend of magic and tech. I enjoyed the mix. Any more of them in the pipeline? I know that some times you run out of things to say and must move on, leaving old friends behind, looking to new. With the young sourciers coming onto the stage and other things going on. was thinking that there is more to be said

    • There are books planned, but getting them down on (electronic) paper is proving difficult. I have general concepts for two plot threads, one dealing with the up and coming sorcerers, and one set a good 18 years in the future with a lot of werewolves. Getting the detail together to make them work has proven a lot harder than I expected. I haven’t given up on them yet, but I also don’t have a timeline for them being published.

      This reply brought to you by insomnia.

      • thaxs for the info. I do have an idea for you. lol I’m good a ideas no so good at getting them down on paper. This is more a what if, and how do we go from there. In Thaumatology magic came back into the world as a hammer. What if magic came into our world more like a rock chip in the windscreen of your daily driven auto. Annoying but mostly ignored then one frosty mourning as you are late for work. BLAM you have a right bloody mess. My Idea was that some failing high energy lab in an old university building was about to loose it’s grant and close. In a last ditch move they try an off the wall experiment . It fails but in a way that forms a small CRACK. The prof loses his grant moving on.. The next one moves in but things just don’t seem to work right. The building gets a rep of having bad luck, bad karma with only the desperate moving in. The small crack slowly getting bigger as the magic field grows with each new experiment that fails. When like the windscreen with a bang, pop and a snap it becomes too big to ignore….. From that point, well LOL you know better then I what story you want to write =)

  9. FWIW there was apparently an issue that Amazon was selling books from their Luxembourg affiliate for a while and everyone was getting charged the lower rate for VAT. So they had to rework their system to charge based on the buyers origin instead.

    Amazon is essentially now required to back the local rate out of the price (which will stay the same) and that is the basis for your royalty after paying the VAT. That was why they bumped the prices last year on January 1.

    • That’s unrelated and, actually, nothing to do with Amazon. The EU changed their rules so that ALL online retailers had to charge VAT at a rate local to the customer instead of the seller. It caused no end of problems and probably forced some smaller businesses out of business because they couldn’t handle the change. The European Union, crapping on the little guy since 2016. 😛 And that’s from someone who’s nominally pro-EU…

  10. Small unrelated question
    Did you voted pro or against teh Brexit and what ar your thoughts on the hole affair

    • Against. Most of the reasons people gave for leaving were outright lies, but lies seem to be the new truth so it’s hardly surprising that we voted to leave.

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