- Original Poster
- #1
I've read a few other posts and they don't really answer the question.
I'm new to Dropshipping and HMRC are struggling to find and the answer.
I'm VAT registered and I place the order on behalf of the buyer directly with the manufacturer in China. I never see or touch the product as the product is shipped directly from China to the buyer (it can be worldwide, but let's stick to the UK and EU). I am in theory an agent. The manufacturer allows me to sell the products at whatever price I want.
The product including shipping is $250 to $3400 depending on the model. The buyer is aware that I am an agent and that I would be making a small profit on the sales, the buyer is aware that they are liable for VAT and the brokerage fee at import.
HMRC have suggested (they are still looking into this) if the product is £100 (to keep the maths simple) and I collect £110 (sale price) from the buyer I do not invoice the buyer with VAT because the buyer is already paying the VAT at import on the £100. HMRC then said I should invoice the manufacturer for the remaining £10 as "commission" which is exempt of VAT as it falls out of scope because the manufacturer is not in the UK or EU. My profits would be less than the £10 as I would need to pay eBay fees, PayPay fees and fees to convert GBP to Bitcoin.
The manufacturer would find the invoice confusing because they will not be paying me the amount stated on the invoice and the manufacturer is not aware of the price that I am charging the buyer.
Does this sounds correct to anyone?
I also need to know if the buyer buys a product which is to be hosted in China. Do I still don't charge the buyer VAT as the product has not landed in the UK and do I still invoice the manufacturer without VAT for my "commission" that the manufacturer does not pay me? They buyer is allowed to change their mind at a later date to have the product hosted product to be shipped to them and the buyer is aware that they will be liable for VAT and brokerage fees on import as well as the shipping cost. I would have to probably collect the shipping fee + PayPal and Bitcoin fees from the buyer (I do not intend to make a profit on this transaction)
I'm new to Dropshipping and HMRC are struggling to find and the answer.
I'm VAT registered and I place the order on behalf of the buyer directly with the manufacturer in China. I never see or touch the product as the product is shipped directly from China to the buyer (it can be worldwide, but let's stick to the UK and EU). I am in theory an agent. The manufacturer allows me to sell the products at whatever price I want.
The product including shipping is $250 to $3400 depending on the model. The buyer is aware that I am an agent and that I would be making a small profit on the sales, the buyer is aware that they are liable for VAT and the brokerage fee at import.
HMRC have suggested (they are still looking into this) if the product is £100 (to keep the maths simple) and I collect £110 (sale price) from the buyer I do not invoice the buyer with VAT because the buyer is already paying the VAT at import on the £100. HMRC then said I should invoice the manufacturer for the remaining £10 as "commission" which is exempt of VAT as it falls out of scope because the manufacturer is not in the UK or EU. My profits would be less than the £10 as I would need to pay eBay fees, PayPay fees and fees to convert GBP to Bitcoin.
The manufacturer would find the invoice confusing because they will not be paying me the amount stated on the invoice and the manufacturer is not aware of the price that I am charging the buyer.
Does this sounds correct to anyone?
I also need to know if the buyer buys a product which is to be hosted in China. Do I still don't charge the buyer VAT as the product has not landed in the UK and do I still invoice the manufacturer without VAT for my "commission" that the manufacturer does not pay me? They buyer is allowed to change their mind at a later date to have the product hosted product to be shipped to them and the buyer is aware that they will be liable for VAT and brokerage fees on import as well as the shipping cost. I would have to probably collect the shipping fee + PayPal and Bitcoin fees from the buyer (I do not intend to make a profit on this transaction)
