Blog Archives

Want to set up an online art gallery with ecommerce?

28/4/2017

I got an email this morning asking questions about the tax aspects of setting up an online art gallery and ecommerce which involved artists and paying customers who might be located anywhere in the world

Below you can read:

the email I got and the "short sharp" response I sent below.
a checklist for anybody thinking about setting up an ecommerce facility to sell art

What are the tax implications of selling art online?

This is the email. I've numbered the questions to make them more accessible online in a blog post

Dear Katherine,

Firstly, I owe you my sincerest gratitude for all the information you have presented on this website. It has answered many questions I had and for that I am grateful.

I am on the verge of launching an e-commerce online gallery and I was hoping you could answer a few questions for me. This my first time dealing with anything to do with e-commerce and selling online so there is still a lot I don’t understand.

1) Some of the artists who I represent do not reside within the UK or the EU, and there is no guarantee that any paying customer would reside within the UK or EU either. How would this affect me regarding tax?

2) When this business takes off, I plan on becoming location independent. How will this affect my tax status as I won’t be living within the UK but my business will be registered in Britain?

3) How would it work when it comes to putting an address on my invoice if I’m only in the same location for a limited amount of time?

Thank you again,
Kind regards,

Mr Gallery Man ( a pseudonym)

It generated a very "to the point" response from me!

Dear Mr Gallery Man

If you are setting up a business you need professional (i.e. paid) tax advice from an expert to make sure that:
- you are aware of all your legal responsibilities tax wise
- where you live and where you operate are tax efficient given who you expect your customers to be
- you get to keep your house because the tax man doesn't come looking for the tax that you have avoided - with penalties and a possible prison sentence
This is serious. You need proper advice. That's not going to come from me.

The next point I'd make is that I have seen any number of people have the bright idea of setting up an online art gallery operating through ecommerce in the last 10 years. I'd say round about 95-99% of them no longer exist.

I think you need to do more research about the marketplace and what sort of investment you need to make in time and effort - and contacts / social media following - to make it work.

My one piece of advice for you is if you have never run a business before and if you have never been involved in the art market before, run away fast before you waste an awful lot of money for no return.

Regards

CHECKLIST:
How not to get stung when setting up ecommerce!

Do thorough research first. You should never be starting any business where you don't fully understand the full implications. Those that do go out of business very fast. How anybody could be contemplating starting an ecommerce business without what understanding what they are getting into is beyond me!
Get professional tax advice if you plan to set up a business. You're an amateur. You haven't got a clue what you don't know about tax. Tax experts exist for a reason. Paying for tax advice is a legitimate business expense which is deductible against tax - so long and only if it is related to the business and not your personal income. If you can't afford the tax advice you definitely can't afford to set up in business involving ecommerce.
Understand the competition - you need to research and understand the business model adopted by your competitors. Those who are still in business after few years either know what they're doing, have good advisers, are prepared to keep going even if they're not making much money - and/ir the tax man has not yet caught up with them. Take a look at how where they are located and how they deal with local taxes on transactions for people living in different countries. Don't assume that what they are doing is correct, however it gives you a basis for an intelligent discussion with a tax expert!
There is no escaping tax liability - make sure you don't get landed with an enormous tax bill! - Governments have woken up to the fact that they are losing out massively on tax revenues through the amount of business which is now transacted online. Tax authorities are now paying a lot more attention to online businesses. You should assume that anything you are doing which evades payment of tax (whether deliberate or inadvertent) will result in a tax bill plus penalties plus a possible prison sentence. They are getting very serious about this.
Understand the differences in tax treatment of private sales vs sales via art dealers and galleries. What quite a few people don't understand is that private sales - between an sole trader artist and a paying customer are very different from sales via third parties. There's also a difference between a third party which hosts a site that enables artists to make contact with paying customers and those where the artist is represented by a gallery and sells art via the dealer/gallery online. The differences largely relate to thresholds for payments of additional taxes; liability for additional taxes unrelated to thresholds and whether they way the ecommerce is configured is deemed to be an evasion of tax.
Understand why Tax gets much more complicated when transactions are online. You have to make sure you observe the tax regime for where you live, where your business is located - and also where your paying customer lives. For example, with respect to the pursuit of lost income from tax on online transactions for digital services, the EU changed the treatment for all digital transactions in 2015. Now VAT is payable based on the place where the customer lives NOT where the artist or the business is located - and there is no minimum threshold for registration in another country (a total nightmare!). They're also not at all keen on people trying to get round this by saying they won't do business with anybody outside the country where they live - and were threatening penalties for this last time I read up on this!

EU VAT rule change
From 1 January 2015, the rules around the European Union (EU) VAT place of supply of services will change. This will affect the sales of digital services (broadcasting, telecommunications and e-services) from a business to a consumer (private individuals and non-business entities for example, public authorities or charitable bodies). The place of taxation will be determined by the location of the consumer.
VAT: businesses supplying digital services to private consumers

Bottom line, if you are

operating as a sole trader as an artist or art tutor involving ecommerce
or you are hosting an online gallery with ecommerce facilities for selling art for artists you represent and/or other artists,

you need to be very careful that you have sought professional advice and checked out all relevant tax aspects for your particular set-up - which you have explained very clearly to your tax adviser. (NB Only telling them what you think is relevant isn't a helpful approach since you don't know what you don' know!)

Just because somebody says they operate in a particular way doesn't make that right or legal - unless they can produce the letter from their tax advisors explaining what they can and cannot do!

BTW I'm NOT a professional tax expert. You should make sure you also read the note below about what this site does not do.

You can learn a lot from authoritative tax sites online - but they don't have all the answers!

More information about tax and vat for artists

You can read more information on this website on the following pages in the Money and Tax section

Tax Tips for Artists
VAT for Artists

The information I collect, collate and organise on this website largely relates to information accessible to anybody from authoritative sites - either formal government tax authorities or professional tax advisers. Plus some common sense advice from me about how to organise your tax affairs.

What this site does not do

This site does NOT provide:

Definitive answers on all matters relating to tax records for where you live.
"Professional advice" available from somebody with a tax qualification and current expertise of tax affairs anywhere in the world.

I recommend that you pay a professional for tax advice IF:

your tax affairs are complicated
you have a specific tax query which you can't find an answer to from official information available online.

0 Comments

How to report a spam email address

21/4/2017

1 Comment

One of the things that happens to many artists with a new (or existing) website is that they get spammed by companies who want to "help you sort out your website".

This post is about a few things you can do to stop spam and stop scammers

how to check the whether it's spam
how to check if it comes from a scammer
how to report spam from a scammer to the official authorities

Characteristics of spam from a scammer

Most such approaches are almost universally scam operations. Such emails typically have similar characteristics

They send automated template letters out i.e. they do not approach you by name - even if your name is on your website under your "about me" section.
The letter is robotic. They have a long list of things that are wrong with your website (even if they are not)
Their assertions may contain totally incorrect information (eg the ones I get tell me they can help me set up a responsive website - for a site which already has a responsive website)
There is no website for the domain name

Most importantly, the letter is wholly unsolicited. That of itself makes it spam.

How to check if it's spam from a scammer

Things you can do are:

Check the name of the person it is sent to - if it's not your name then it's spam
Check the domain name (that's the end of the email address (e.g. the one I got this morning "weboptmizes.com") If it doesn't exist - and this one didn't then you can very reasonably conclude that it's a 100% a scam.
Check ownership details. Check whether the website - if it exists - includes the names of the people who own the site and a complete postal address - as required by law because it is trying to sell a service via the internet. I have been known when pretty certain that a plausible email is actually spam to check out that address using Google Streetview! Locations tell you a lot!

How to report spam from a scammer

Block the address
See if you can block the email address. This requires two things:

the spam email needs to have come direct from a scammer and NOT via a third party (such as my website host Weebly)
your email provider needs to have a function for blocking emails from specific addresses or domain names (eg gmail does this)

However I can't block the email addresses if they come via Weebly my website host - because all I'd be doing is blocking all email from Weebly and not making one bit of difference to the spammer!

What I want is for Weebly to implement a filter to catch the scammers - and so far Weebly has not done this (which is very irritating!) All they need to do is implement an address for reporting scammer/spam email addresses - but they've not done this to date.

If you have a website host who also does not use filters or a reporting button from spam from scammers you might want to try persistently raising this issue with them as I do!

IN THE USA: Report the email address to the Federal Trade Commission
The next best thing is to report the email address to the body which is set up to protect consumers from scammers of this sort.

This is the Consumer Information page about Spam on the Federal Trade Commission website and it tells you how to report spam.

Report Spam
Forward unwanted or deceptive messages to:
- the Federal Trade Commission at spam@uce.gov. Be sure to include the complete spam email.
- your email provider. At the top of the message, state that you're complaining about being spammed. Some email services have buttons that allow you to mark messages as junk mail or report them spam.
- the sender's email provider, if you can tell who it is. Most web mail providers and ISPs want to cut off spammers who abuse their system. Again, make sure to include the entire spam email and say that you're complaining about spam.
If you try to unsubscribe from an email list and your request is not honored, file a complaint with the FTC.

In the UK: Report the email address to the Information Commissioner

The Information Commissioner's Office is responsible for

the regulation of the conduct of those using your personal information to contact you and
marketing on the internet.

This is the ICO Information Page for the Public about spam emails. It provides very useful information about why they arise and what you can do about them - and what they can do about organisations based in the UK.

They also indicate who can send you marketing letters and who cannot.

The Privacy and Electronic Communications Regulations 2003 cover the sending of email marketing. This legislation says that organisations must only send marketing emails to individuals if you have agreed to receive them, except where there is a clearly defined customer relationship.

Clearly if you've not signed up for communications from third parties via your web host then you should not be receiving these emails. You should certainly investigate whether your web host sells your email address to third parties or whether they have your consent on record relating to communication from third parties.

If you've made sure that this has not happened, then you can assume such emails to be spam from scammers (i.e. they are not observing the regulations relating to internet marketing and selling services via the internet).

It has a section on What can I do if I’m getting unwanted marketing emails? which contains two reporting buttons. I suggest you bookmark the page if you live in the UK and want to help stop spam from scammers.

Interestingly they also say on the same page that they operate arrangements with international agencies to exchange information. So although they can only operate in respect of organisations which are based in the UK that doesn't stop them sending on information to other countries.

What this website is less helpful about is recognising that much of such spam emanates from websites which don't exist!

Did you find this helpful?

I hope you found this helpful.

If you'd like to receive blog posts from this website in future you can sign up for Subscribe to Art Business Info. for Artists - NEWS by Email and receive every post via email.

Please note

your subscription is only activated and you will only receive an email AFTER you verify the link in the email you will receive. This is the protection for you which means people can't insert your email into subscriptions without your consent.
if you do NOT activate it then I periodically delete such subscriptions.
In addition there is always an UNSUBSCRIBE button in every email if you don't want to receive emails any more - and you should always use the unsubscribe button if you've changed your mind about a subscription and NOT the spam button!

1 Comment

Art Business Info: NEWS

Want to set up an online art gallery with ecommerce?

What are the tax implications of selling art online?

CHECKLIST:
How not to get stung when setting up ecommerce!

More information about tax and vat for artists

What this site does not do

How to report a spam email address

Characteristics of spam from a scammer

How to check if it's spam from a scammer

How to report spam from a scammer

Did you find this helpful?

Art Business Info. News for Artists

Visitors so far

GET Art Business Info. NEWS by Email

Author

Archives

Categories

Art Business Info: NEWS

Want to set up an online art gallery with ecommerce?

What are the tax implications of selling art online?​

CHECKLIST: ​How not to get stung when setting up ecommerce!​

More information about tax and vat for artists​

What this site does not do

How to report a spam email address

Characteristics of spam from a scammer​

How to check if it's spam from a scammer​

How to report spam from a scammer​

Did you find this helpful?

Art Business Info. News for Artists

Visitors so far

GET Art Business Info. NEWS by Email

Author

Archives

Categories

What are the tax implications of selling art online?

CHECKLIST:
How not to get stung when setting up ecommerce!

More information about tax and vat for artists

Characteristics of spam from a scammer

How to check if it's spam from a scammer

How to report spam from a scammer