Initial VAT return

[Australia]

Hi there,
I have just started another venture and am looking to sell some high range cosmetics that will be purchased in Italy.
I am looking to buy around £300k worth of stock and will probably need to lodge my first VAT return before much of it has been sold. Am I able to therefore claim the VAT back on this expenditure. It comes to quite a large sum of around £55k. Does HMRC just write me a cheque(or send it to my bank account)?
I know I would then have to refund this as I sell my stock but is that how it works?
Any information would be helpful.
Neil

[David Griffiths]

It's not a straightforward input tax claim, and depends how you buy the goods. If you buy the goods IN Italy, you will be charged Italian VAT. You cannot claim this on your UK VAT return, but use a special form - details here. (http://www.hmrc.gov.uk/vat/managing/international/overseas-traders.htm) Look at the timescales. The UK office will deal with it in 15 working days, but it's then sent to the Italian VAT authorities who will give a decision within four months. However, the Italian VAT office is not renowned for doing anything on time,

If, on the other hand, you buy the goods FROM Italy (in other words the Italian vendor ships them to you in the UK) they will not charge you VAT provided that they are given your UK VAT registration number. You have to account for this under the reverse charge mechanism

[Australia]

David,
I would be getting the goods shipped over here. How then does the reverse charge mechanism work in relatio0n to claiming back VAT and the timescales? My research shows that only mobile phones and computer chips use this type of charge, is this not correct?
Neil

[David Richards]

David,
I would be getting the goods shipped over here. How then does the reverse charge mechanism work in relatio0n to claiming back VAT and the timescales? My research shows that only mobile phones and computer chips use this type of charge, is this not correct?Confusingly there are number of different process which involve some kind of 'reverse charge' process - although HMRC generally don't use that term themselves in reference to acquiring goods from another EC country, they sometimes call it acquisition tax (http://www.hmrc.gov.uk/vat/managing/international/imports/importing.htm#1).

In simple terms, when you complete your VAT return (http://www.hmrc.gov.uk/vat/managing/returns-accounts/completing-returns.htm), you work out how much VAT you would have paid had you bought them from a UK supplier. Then you pay and reclaim that 'notional VAT' at the same time. So no money actually changes hands.