VAT advice

Lifeisbutadream

moneypooh wrote: »

I'm really confused now but I'm going to keep watching

Me too :cool:

blue_monkey_2

Are the pair of you really that stupid? This has to be a wind up, right?

So what you are saying is that you would not be buying from him at 10% of his cost, you are buying for 1% incuding VAT and then he will be charging you for goods you have not bought on a 0 rated basis. He is claiming his VAT back but not passing that VAT onto you - as he is required to by law.

Let's juts hope that no-one gets a visit from the VAT Man or Tax Inspectors else that £15 you saved is going to have to go towards your fines. Doh!!

Genuis. If it was that easy don't you think everyone would be doing it?!

Therefore I would have purchased goods at the ex. VAT price, whilst still paying VAT. Is this tax/VAT fraud? Sorry for any confusion!

You have knowingly participated in VAT fraud - and if you are not declaring your profits then yes, that would be tax fraud also.

Bean_Counter

Well I'm no VAT expert but I do think that this is not allowed.

VATA 1994 Sch 6 paras 2, 13 state that HMRC can value a retail supply between a VAT registered person and a non-VAT registered person at open market value. Hence in Tom's example they would value the TV at around £115 and account for VAT on that value.

As with most things with VAT it seems a complicated area and as I said I am not expert, but with you usually find that there is some law somewhere where you are trying to evade paying HMRC some taxes.

You might also want to refer to EC Sixth Directive, Art 27, Direct Cosmetics Ltd v C&E Commrs, CJEC [1985] STC 479 (TVC 21.320) (and the subsequent appeal by Direct Cosmetics and Laughton Photographs Ltd v C&E Commrs, CJEC [1988] STC 540 (TVC 21.321)) and Gold Star Publications Ltd v C&E Commrs, QB [1992] STC 365 (TVC 65.25). Perhaps also C&E Manual V1-12, Chapter 2 para 4.4 and this link.

moneypooh

If I'm so stupid why did you answer the question?:p

blue_monkey_2

my_names_tom wrote: »

chalkie99 - very funny! Care to explain why it is illegal?

Erm... let's see. For a start because your friend is charging you for Zero rated goods he does not sell.

Let me put this senario to you:

1) you 'mate' buys goods worth £100 and reclaims said VAT on his return.

2) your 'mate' sells said goods to you and notes on his VAT return that he has sold 1p of VAT rated goods and £99.99 of zero rated goods.

3) Tax office wonders why your 'mate' is reclaiming for Goods that have VAT on them but is selling them without.

4) You'll both get busted and that £15 saving seems a bit ludicrous when you are getting your @ss wiped by HMRC.

I've worked at a company that has had a VAT inspection - they let nothing go. I guess every fool thinks they will get away with it and that is why they do it, you clearly think that you'll get away with it and have come here to brag about it so go for it, nothing any of us say are going to stop you judging by that comment!!

blue_monkey_2

moneypooh wrote: »

If I'm so stupid why did you answer the question?:p

I didn't mean you.... stupid!! :rotfl:

I was talking about the OP and his 'mate' (ahem, they all have 'mates' don't they).

moneypooh

yeah I know It just read funny!!!!:rotfl: :rotfl: :rotfl:

my_names_tom

blue_monkey wrote: »

Erm... let's see. For a start because your friend is charging you for Zero rated goods he does not sell.

Let me put this senario to you:

1) you 'mate' buys goods worth £100 and reclaims said VAT on his return.

2) your 'mate' sells said goods to you and notes on his VAT return that he has sold £100 of zero rated goods.

3) Tax office wonders why 'mate' is buying goods with VAT on them but selling them without.

4) You'll both get busted and that £15 saving seems a bit ludicrous when you are getting your !!! wiped by HMRC.

I've worked at a company that has had a VAT inspection - they let nothing go. I guess every fool thinks they will get away with it and that is why they do it, you clearly think that you'll get away with it and have come here to brag about it so go for it, nothing any of us say are going to stop you judging by that comment!!

Firstly, there is nothing suggesting my friend does not sell zero-rated goods, if a sale of them were needed to make it bona fida I would ensure a real sale of physical goods took place.

Secondly I do not currently do this. I have a very limited knowledge of tax and VAT which is why I came onto this forum for advice. I would not participate in any activity I knowingly knew was fraudulent or illegal and it angers me that you suggest I do.

Thank you to those that gave helpful advice, I will make a point of reading more into tax and VAT laws for my general knowledge.

blue_monkey_2

I've re-read the opening post and I think this has to be a troll as what he is saying in his steps, 1-4 post is completely different from the OP where he states he'll be buying them for 10% cost.

blue_monkey_2

If this is a serious question there should be something everyone knows and that is that you do not screw with HMRC - they can make far more from you than you can ever make by doing so. It is simply not worth it, I even have insurance incase I ever get a VAT inspection!!

If something looks incorrect or suspicious on your return then you'll be subject for inspection, although we was fine in our workplace when we had it they were there for 3 days and they scrutinised everything, it is very intimidating - even when you have done nothing wrong. He has to keep records of every purchase and sale and it will have to be noted on your Invoice that he has not charged you VAT, if it says he has sold you baby clothes then the VAT inspector will want to see invoices for baby clothes. If he does it without an invoice or papertrail then he is also in trouble. He has to keep these records for 6 years! As do you if buying and selling on. They will them come and see your invoices to see what you have sold them for and if you are not declaring tax they will have you for that too.

That is a very dangerous game you are playing, tax and VAT avoidance are simply not worth it. As you have said, it seems too good to be true then it probably is so leave well alone!!

Is your mate actually suggesting that he does this for you or is it something you have thought of. If he has thought of this then I have to wonder if he fully understands the implications of VAT fraud. I guess not.