VAT for Dummies
"VAT is chargeable on advertising however it is the "customer" of Google who pays the VAT. They would then reclaim it back."
VAT is Value Added Tax; businesses can only claim VAT relief on VAT they pay on goods and services they buy, not the VAT on what they sell. The real fiddle here is to make it look like you're paying out more VAT than you charge yourself, then HMRC will be paying you!
http://en.wikipedia.org/wiki/Missing_trader_fraud
The real problem is that by making it look as if they make no profit (so no value added) they get away with hardly any corporation tax and hardly any VAT; two for one!
Biting the hand that feeds IT
