Almightily confused about vat + ebay, please please help

Plumbers_Shop_Lee

It depends on your suppliers Josh, if you are purchasing from distributors or other VAT registered businesses and your purchase price is £140.00. The products price is £112.00 and you pay VAT of £28.00 which if you go over the threshold you can then claim back

theonlywayisup

As has been said, forget 17.5% it hasn't been that for a long time, it is 20%.

I am a vat registered company as my turnover is over 73k.

In your scenario;

I buy a phone for £120. The phone cost is on my reciept as £100 plus £20 vat. It costs me £120 regardless.

My company buys a phone for £120 for stock. The phone cost on the company reciept is £100 plus £20 vat. The company pays the £120 but offsets the £20 vat. So the phone 'costs' £100.

My company sells the phone for £240. £40 of that is vat. The person buying gets a receipt which says £200 phone, £40 vat.

Taking away any other fees, for simplicity. The company buys the phone for £120 and sells it for £240.

The vat man is owed £20 vat. The company paid £20 vat on the purchase, which the vat man lets the company offset on the sale, but the company owes £40 vat on the sale, so the vat outstanding is £20. So the profit on the phone is £100. £240 less £120, less vat owed of £20.

As a private buyer, I pay vat on the phone but as I am not vat registered I sell the phone for £240 but cannot offset any vat. My profit is therefore £240 less £120, so £120.

Is that any clearer?

joshclem

through the efforts of everyone combined i am now un-confused.

thanks a lot

Crowqueen

Furthermore be aware that all sales on eBay must be quoted as VAT inclusive, even if you sell to a business customer who can offset VAT.

You can list something as £120 and then pay 20% VAT - ie £20 - to the taxman. Of course if your item is being auctioned then VAT will increase proportionate to the price it sells for. The formula for calculating this is much, much simpler than it used to be.

You can list something as £100 + VAT but the start price/BIN price must be £120.

You cannot list something as £100 + VAT, with the start price/BIN as £100 and then charge the buyer £20 VAT after the sale EVEN if you know most of your customers are businesses. eBay has its own rules which, provided they are not unlawful, can impose other responsibilities (just like their buyer protection scheme is much tighter than the minimum standards imposed by consumer law). Although it is not unlawful for you to list things exclusive of VAT when selling to businesses, since eBay is a consumer website and everything is open to consumers, then they can lay down house rules to say that all prices must be stated inclusive of VAT.

There are still people who don't know this rule, so it's important to note it. This is really just for reference; I think you intend to pitch your items at consumers anyway.

delta-1

Here's a good place to start for basic Qs too
http://cgi3.ebay.co.uk/ws/eBayISAPI.dll?ViewUserPage&userid=talkinpeace

RFW

There is lots of free professional advice available to anyone starting up a business. Whilst the advice above is correct, if something does go wrong it isn't much of a defence to HMRC if you say someone told you what to do on the internet.

http://www.businesslink.gov.uk/bdotg/action/layer?topicId=1073858805 is a good place to start and HMRC themselves offer free guides to starting up with tax and VAT.

rdwarr

marie-20 wrote: »

Agree - you have to be taking in £73k before you pay VAT (not profit)

Everybody pays VAT. You have to be turning over this amount before registration is compulsory. Then Ebay will not charge VAT on their fees so it appears cheaper (but you would claim the VAT back anyway).

I ran a business on Ebay for a couple of years. Was hard to make a living and would be harder these days.