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  • FIRST POST
    • alexskelton
    • By alexskelton 12th Feb 19, 10:33 AM
    • 2Posts
    • 0Thanks
    alexskelton
    Under VAT E-Commerce
    • #1
    • 12th Feb 19, 10:33 AM
    Under VAT E-Commerce 12th Feb 19 at 10:33 AM
    Hi All

    I am currently setting up an e-commerce clothing company and have a couple of questions I hope aren't too hard to answer.

    We have been paying designers, printers and suppliers, all of whom have charged VAT on their services. We have not yet registered the company yet, something we will be doing very soon though we have personally paid for a number of the above services. We also do not plan to be above the VAT threshold in the first 18 months.

    My questions are:
    I am under the impression we do not charge VAT to our customers as we won't be registered?
    Are we able to claim back any VAT paid to suppliers throughout the year?
    Will we be able to claim back any of the VAT that was paid personally prior to the company set up?

    Thank you for any help and let me know if you need any more information.

    Alex
Page 1
    • Pennywise
    • By Pennywise 12th Feb 19, 10:47 AM
    • 11,218 Posts
    • 21,327 Thanks
    Pennywise
    • #2
    • 12th Feb 19, 10:47 AM
    • #2
    • 12th Feb 19, 10:47 AM
    Please see replies below

    My questions are:
    I am under the impression we do not charge VAT to our customers as we won't be registered? Correct - it would be unlawful to do so
    Are we able to claim back any VAT paid to suppliers throughout the year? Not unless you register for VAT, and then you'd have to charge VAT to customers.
    Will we be able to claim back any of the VAT that was paid personally prior to the company set up? Maybe, maybe not - depends on the way the conversion from sole trader to limited company was structured (if you start trading before the company is formed) and the time of VAT registration
    Originally posted by alexskelton
    • alexskelton
    • By alexskelton 12th Feb 19, 10:54 AM
    • 2 Posts
    • 0 Thanks
    alexskelton
    • #3
    • 12th Feb 19, 10:54 AM
    • #3
    • 12th Feb 19, 10:54 AM
    Thank you for getting back to me!

    Is there any reason to register for VAT before you have to? What I mean by this is, are there any situations where it would be financially advantageous too?

    Also we haven't started trading (haven't sold a piece of clothing yet), there are three of us and we are just paying for it out of our pockets.
    • Pennywise
    • By Pennywise 12th Feb 19, 11:28 AM
    • 11,218 Posts
    • 21,327 Thanks
    Pennywise
    • #4
    • 12th Feb 19, 11:28 AM
    • #4
    • 12th Feb 19, 11:28 AM
    Is there any reason to register for VAT before you have to? What I mean by this is, are there any situations where it would be financially advantageous too?
    Originally posted by alexskelton
    Yes, it can often be advantageous, but will depend entirely on your initial up front costs, etc. The only way to find out would be to do some financial forecasting, i.e. cash flow forecasts and profit & loss forecasts, with and without VAT registration, then it would highlight the pros and cons for both cash flow and profit (which are likely to be opposite, i.e. likely to be improved cash flow at first, but reduced profit/cash flow later).
    • Elise1912
    • By Elise1912 13th Feb 19, 12:18 PM
    • 23 Posts
    • 50 Thanks
    Elise1912
    • #5
    • 13th Feb 19, 12:18 PM
    • #5
    • 13th Feb 19, 12:18 PM
    My ecommerce business is under the VAT threshold. I don't charge VAT to my customers but I do have to pay VAT on products and services I use. What's the current VAT threshold for 2019/2020 please?
    • Mistral001
    • By Mistral001 13th Feb 19, 1:57 PM
    • 3,444 Posts
    • 2,647 Thanks
    Mistral001
    • #6
    • 13th Feb 19, 1:57 PM
    • #6
    • 13th Feb 19, 1:57 PM
    Note you can register for VAT if you are a sole trader.
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