VAT question

[runningwolf]

Really more a discussion point that a question I think. When I send goods outside the EU I always deduct VAT, this seems fair to me.
Just been talking with a customer that buys from several places in the UK and everyone else he buys from charges the VAT inclusive prices to him.
Is it right for businesses to do this?
It seems to me they are simply making an extra 17.5% profit on those items.
On a seperate issue, this guy is buying more and more made in England goods to sell in China, makes a very pleasant change :)

Cheers
Paul
www.theorderofinitiative.co.uk

[MASTERforge]

They charge VAT for outside EU? That seems odd.

You can charge your non EU customers VAT. They can reclaim it from their customs authorities. I am not sure how it goes with accounts though? Would HMRC want the VAT or could you keep it?

Theoretically you could charge him VAT but in your accounts mark it as zero rated. So you get an extra 17.5%. It would be misleading your customer, and probably considered theft from HMRC.

I sell outside the EU as well. I quote prices VAT exempt. This encourages customers to buy. When they see they hefty VAT it can be a barrier to sales.

[runningwolf]

As I understand it, you should not really charge VAt and customs wont ask for it.
I imagine the stores are set up so only VAT inclusive prices are used and there is probably no facility to deduct VAT, they may not even display a VAT total on the paperwork going out with the order.

[pnagames]

i have quoted prices to people outside EU without VAT (as it is the right thing to do) however i charge delivery (where i dont if its eu and uk)

i think if they charge the rate they will have to pay it to hmrc and it will up to their customer to claim it (which they can)

[wjcampbe]

VAT depends on the location where ownership changes. If the goods are collected from your UK address by the client, and he makes shipping arrangements, the point of supply is UK an VAT has to be paid on the value of the goods.

If you do the shipping, and ownership passes to the foreign client on arrival at the port of entry to the destination country - as long as s/he is outside the EU - no VAT is due. You need to be able to provide HMRC with the foreign customers address and proof of shipping (technically, you should have an export certificate - but in practice, proof that you delivered the item for shipment is usually enough).

[chris ashdown]

You can charge your non EU customers VAT. They can reclaim it from their customs authorities. I am not sure how it goes with accounts though? Would HMRC want the VAT or could you keep it?

Theoretically you could charge him VAT but in your accounts mark it as zero rated. So you get an extra 17.5%. It would be misleading your customer, and probably considered theft from HMRC.

.

This is wrong you only charge vat on goods destined for the EU, you do not charge vat for area's outside the EU

If you charge vat for whatever reason you have to enter it in your vat returns

Companies inside the EU that are registered for VAT and outside the UK can give you their vat number and then you can excempt them from vat but still register the transaction to HMRC (channel islands are outside uk for this)

[chris ashdown]

Just been talking with a customer that buys from several places in the UK and everyone else he buys from charges the VAT inclusive prices to him.
Is it right for businesses to do this?


If they are selling to him in the UK then its right to charge vat, if he is asking for it to be delivered outside the EU then thay should delete the vat(actinic provides for this to be done)

He might be buying from companies who are not vat registered and would in that casr not be charged vat or able to claim it back

[runningwolf]

I know one of the companies he deals with is certainly VAT registered, on their site they just show one price and thats what this guy in china has to pay. As far as I can tell they are simply pocketing an extra profit. I have told him to ask them to deduct VAT when he next orders, will be interesting to see the response he gets :)
I was just wondering what the legal position is if a company that displays prices that it states are VAT inclusive then sells them outside the EU without deducting VAT. Seems wrong to me but maybe not illegal.

[chris ashdown]

HMCR wont complain as long as it is entered in his returns ok, but if he is keeping the money it is fraud and hmrc should be informed on their "rat on the bastards" website

[acompton]

HMRC pick up things like this if they do an inspection.

Alan
www.greenknightgames.co.uk

[Darren B]

I am sure it is perfectly legitimate to charge VAT if you so wish, remember the VAT man will never penilise you for getting him more money.

At the end of the day if a company wants to go to the exspense of itemising these transactions on the accounts for the extra sales then they can, if they want to keep things simple then they charge VAT on everything, less work this way

Cheers
Darren

[chris ashdown]

I am sure it is perfectly legitimate to charge VAT if you so wish, remember the VAT man will never penilise you for getting him more money.


Dareen

Not clear how it's legitamate to charge someone for a tax that is not applicable to them, more like fraud especially if done with full knowledge

If VAT inspectors find these sort of items they will no doubt start nit picking your accounts causing you a great deal of time and explanations if not fines for not operating the system correctly

[pnagames]

Dareen

Not clear how it's legitamate to charge someone for a tax that is not applicable to them, more like fraud especially if done with full knowledge

If VAT inspectors find these sort of items they will no doubt start nit picking your accounts causing you a great deal of time and explanations if not fines for not operating the system correctly

Chris

actually this is not fraud.

as it has been said before you can charge VAT as long as it is paid to the VAT man. if its not paid then prepare for fines.

i think VAT inspectors will only care if you have paid the vat man (if you have charged)

and i do not think that they will spend any extra time if you can prove that you have given that vat to the vat man.

[chris ashdown]

If you are vat registered then you are to follow the rules on how and when to apply vat, you do not have discression to make either yourself or HMRC life easy

If the company are knowingly charging a tax that is not applicable then that is fraud regardless of where the money ends up and they are not the modern day Robin Hood helping the goverment but just a company who feels it does not have to follow the rules

As such do you think the HMRC will thank you for not following its rules and have a much deeper look at your books to see what else has been done in breaking the rules

Anyway why would anyone want to sell an item say to the dear old USA for £117.50 and get maybe one order or sell at £100.00 and hopefully get many more orders when your profit is the same?

[Darren B]

OK

It is a clear as mud, you do not have to charge VAT and Mr VAT man says you should not charge VAT if it has left the EU and you can prove and have documentation to say it has. Now this is were it gets a bit cloudy as putting it in the post does not constitute evidence? so therefore you must charge the VAT as Mr VAT man will not accept that you saying you did as evidence

So that cleared that up then.

Just let you know they said you should'nt charge VAT, i asked so i must not charge VAT they replied you should'nt charge VAT i think they call this sitting on the fence

Cheers
Darren

[leehack]

If your pricing is clear and Mr America decides to buy it including vat and you then pay that vat to the vat man, i don't see the problem. True this may hinder further sales and limit them, but that is a business operational failing, not even close to breaking of any law. It's a guideline for just that reason, it can be interpreted in a number of different ways, as long as you are not breaking the law (which you are not), then it is fine.

Unless they clearly state if you charge vat to someone when you shouldn't that you will be thrown in jail and the key disgarded, there really is no problem as far as i can see. My best mate (Mark the accountant) is sitting here chuckling at me writing this but also nodding.

If you dont charge vat then Mr America is happy, if you do then the vat man is happy, whatever you do consider yourself a hero as you have made someone happy.

[runningwolf]

I dont think its a case of you do not have to charge VAT, if the customer is outside the EU you must not charge him VAT. Anyone leaving there prices as the VAt inclusive prices are nt going to hand the government a tax that should not have been charged in the first place. Its a while since I did the VAT returns but I thought you declared sales outside the EU as a seperate total. Any tax inspector worth his salt that found you had been charging VAT when you shouldnt have been is going to immediatly assume you do not know what you are doing and want a good hard look at your books. It quite simple to supply the customer with a simple packing slip in his order that has no totals, most americans dont even know what VAt is so are unlikely to question it anyway.
You then simply declare the sale without any VAT and bingo your profit margin has gone up by 17.5%. My gut feeling is this is a pretty comon practice, especially with companies that have few sales outside the EU.

[runningwolf]

I love this kind of threads.
I would think of myself as a hero for saving out friends across the water some money but a villian for giving the VAT man anyhting they did not deserve.
Boooo those nasty men in suits.

[leehack]

lol whatever floats your boat.
However you choose to handle it, the money isn't yours and if you treat it as such, the door is wide open.

[pnagames]

Anyway why would anyone want to sell an item say to the dear old USA for £117.50 and get maybe one order or sell at £100.00 and hopefully get many more orders when your profit is the same?

god knows why...

you want to appear cheaper so you would not charge vat ( we went back to the customer we quoted a price that we had included vat and we gave the price without vat)