VAT Questions

crandy07

Hello

I want to start selling on eBay, buying goods from the UK and France.

Would it be best to set-up as a sole trader, or just do it normally? I dont expect to be selling more than £60,000.

Also, if I were to set-up as a sole-trader, would I have to pay VAT on stock I buy from UK/France? Can I claim it back, or is it only if I pay VAT can I claim it back? Is it any different claiming tax from countries in the EU?

Thanks

Chris

ukbill69

You can claim back your vat from all your purchases, but theres lot more paperwork and fees when you are VAT registered. You will need to pay an accountant to submit your VAT return to.

Encantador

ukbill69 wrote:

You can claim back your vat from all your purchases, but theres lot more paperwork and fees when you are VAT registered. You will need to pay an accountant to submit your VAT return to.

Can`t see why you need an accountant to do your VAT return.

You can claim back VAT on all your purchases within the EU, but you will have to pay VAT on all your sales.

That will mean charging your buyers VAT or standing the difference yourself out of your profit.

See an accountant before you decide.

motorguy

yes the vat return form is pretty easy to fill in so i wouldnt get an accountant to fill it in. Also there not that much more paperwork, particularly if you're filing invoices etc anyway for accounts.

Personally though, if you don't expect to be anywhere near the vat threshhold for a long time, and you are selling on ebay mostly to private individuals, i wouldnt do the vat thing, as you will make less profit, which will probably be wafer thin on ebay anyway.

Non VAT registered example :-

Buy for £500, sell for £600 = £100 profit.

VAT registered example :-

Buy for £500 inc VAT, claim back the VAT = £425.53. Sell for £600 inc VAT, which you then pay the vat on, so you really got £510.63 for it. Thus bought for £425.53, sell for £510.63 = £85.10 profit

Being VAT registered limits who you can buy from too as you pretty much must buy from a VAT registered person to stand a chance of making a profit (unless its mega cheap!)

EG - buy for £500 from a non VAT registered seller, so you cant claim the VAT back = purchase price of £500, sell for £600, but you have to pay VAT on that so you end up with £510.63 = £10.63 profit!

crandy07

so I would still have to charge the 17.5%, even if I am under 60,000 a year?

motorguy

crandy07 wrote:

so I would still have to charge the 17.5%, even if I am under 60,000 a year?

yes if you register for vat you would have to charge 17.5% vat, even if you are under the thresh hold.

WHA

Also, technically, you can't reclaim VAT charged by other EU countries on your UK VAT return. If you are charged VAT, you would have to submit a claim in the suppliers own country's VAT office. The way around this is to tell your EU suppliers your UK VAT number and then they wouldn't charge you the VAT in the first place. If you are not VAT registered, then registered EU traders have to charge you VAT at their country's VAT rate.

crandy07

OK I understand now, thanks all for your help

the_tired_one

How do you register for VAT and with who?

How much does it cost?

What if you never trade after registering?

JasonLVC

https://www.hmrc.gov.uk (aka, HM Revenues & Customs)

No cost to register, you need a VAT1 form (can be downloaded).

HMRC will want evidence that you intend to trade (ie, what is your product line/service offering). If it is technology based items they may take a bigger interest in you due to some current frauds involving mobile phones and small technology (ipods, microchips, etc) and so may be more suspicious of you - even if you are 100% legitimate.

You can de-register for VAT at any time, also for no cost.

The only reason you'd want to register for VAT is to recover your input vat (ie, what you get charged from your suppliers), if you have high set-up costs (ie, you can recover the input VAt on your premises rental, transport, etc) or if you reach the £61,000 threshold.

If you're a small ebayer, your postal costs will not attract VAT (but courier services will) and you're overheads are likely minimal (ie, your own home and the garage for storing stock) - I guess it all depends upon what you think you'll be making on this. You can always start off not registered and then at any point in the future, register for VAT and your sales thereafter will be vatable (as per earlier posts).
You need to weigh up what input tax you can recover (ie, what VAT you are charged), against what you are selling and how price sensitive that item is. If it has VAT on it will be dearer than other similar items and if that reduces your overall sales, then benefits of recovering input VAT will be outweighed by the loss in your sales.

richt71

Vat forms are very easy to fill in. Also I've found the vat people very good.