Import Duty vs VAT

[Omniquito]

Hi All,

Very noob question but one that I need to clear up anyway.
Am I correct in assuming that the VAT that I pay on a package imported from outside the EU I can offset against the VAT that I charge a customer?

for example: I pay £15k when importing parts and charge a customer £20k in VAT...

Thus I theoretically would only owe the VAT man £5k if I make no more purchases or sales?

Sorry, I am sure this is chicken feed stuff but questions are only easy when you know the answer I guess!

Many thanks in advance, Neil.

[RBS]

For example:

You import stock for 100£, total cost to you including VAT is 117.5£
You sold to customer for 235£ including VAT(200£ price tag +VAT 35£)

You must pay taxman 35-17.5= 17.5£

I hope I am right :D

[RAL]

Hi All,

Very noob question but one that I need to clear up anyway.
Am I correct in assuming that the VAT that I pay on a package imported from outside the EU I can offset against the VAT that I charge a customer?

for example: I pay £15k when importing parts and charge a customer £20k in VAT...

Thus I theoretically would only owe the VAT man £5k if I make no more purchases or sales?

Sorry, I am sure this is chicken feed stuff but questions are only easy when you know the answer I guess!

Many thanks in advance, Neil.

Thats correct but you have to provide your vat number to freight forwarder or dhl whoever you use to import to goods. You pay vat to freight forwader vat. However you can only claim back vat when you receive c79 certificate from HMR&C. So just ensure that you have provided your vat to freight forwarder otherwise it will not be able to claim back vat.

[MASSEY]

on the 200 figure you pay the 35 vat and then you have to reclaim it, so you will have to go without the 17.5 until the end of the accounting period i think

[Omniquito]

Thats correct but you have to provide your vat number to freight forwarder or dhl whoever you use to import to goods. You pay vat to freight forwader vat. However you can only claim back vat when you receive c79 certificate from HMR&C. So just ensure that you have provided your vat to freight forwarder otherwise it will not be able to claim back vat.

Hi RAL,

Thank you for your reply, we are in the process of registering for VAT. Does this mean that I cannot import anything until I get the number?

This could be costly as we are about to import a very large order and if we cannot claim VAT back this could mean big trouble...

Thanks, Neil

[MASSEY]

you can go back as far as 3 years in terms of reclaiming.

[Omniquito]

Filling in your VAT Return

If you're VAT-registered you'll have to fill in a VAT Return at regular intervals - usually quarterly - and send it to HM Revenue & Customs (HMRC). The return shows:

the VAT you've charged on your sales to your customers in the period - known as output tax
the VAT you've paid on your purchases - known as input tax
If the amount of output tax is more than the input tax, then you send the difference to HMRC with your return.


I found this and it looks like you won't have to wait until the end of the tax year as you simply offset it.

[RAL]

Hi Neil

Here is a link to HMRC website to import notice 702 (http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageLibrary_PublicNoticesAndInfoSheets&propertyType=document&columns=1&id=HMCE_CL_000199#P346_48957), have read on section 6 & 8, which tells you more about c79 certificate.



So if you do not have a vat number how you are going to receive c79 certificate?

It is correct that you can go back three years to claim back vat, so in order to claim vat you have to have a vat invoice or vat certificate.

Generally you have to file vat return quarterly, if you on normal standard vat scheme. If you on annual acconting scheme you file just once vat return, but you have to pay by the instalment to HMRC.

Do you have an accountant? If not thent this would be a good time to get one. As you do not want to get it wrong at the start!
HTH