Collecting Products from EU (not for resale). VAT payable?

Discussion in 'International Business' started by J_A_M_E_S, Mar 9, 2021.

  1. J_A_M_E_S

    J_A_M_E_S UKBF Regular Free Member

    121 25
    We have some products from an existing B2B customer in Europe that we have agreed to collect (customer wants a slightly different specification, which we agree to facilitate as it's partly our fault).

    These can't be reworked in-situ, but could be repurposed by us after collection, so we propose to send the revised products over to the customer and then collect the original products.

    We have been told by our carrier that we can't assign a NIL value to what we collect, so we were going to assign the returned products their original price - BUT, if we assign a value we would have to pay VAT on the returned products as though they were a saleable product, which they aren't.

    What is the correct way to handle this procedure?
    Is there a different classification we can use for samples/returns/damages?

    The overall value of these products is c£5,000 and the return of these (including shipping fees) would still leave margin to rework, re-sell and make profit on).

    (we have shipped to different EU companies since January so we are aware of Commodity Codes, weights, Declaration of Origin and all other paperwork that needs to be completed).
     
    Posted: Mar 9, 2021 By: J_A_M_E_S Member since: Aug 11, 2009
    #1
  2. Trevor Andrews

    Trevor Andrews UKBF Regular Free Member

    122 35
    You may not be able to put NIL value but you don’t need to put the overall value either. What would someone pay you now without reworking it?

    What is the value in pure material content? We had supplier put in a value which appeared to be raw material cost without profit etc.
     
    Posted: Mar 10, 2021 By: Trevor Andrews Member since: Feb 9, 2021
    #2
  3. J_A_M_E_S

    J_A_M_E_S UKBF Regular Free Member

    121 25
    Thank you for the response, Trevor.

    It is a better solution that will cost us less, but I still don't agree with having to pay any VAT figure on a product that we have already paid VAT on previously. The products are being returned, unsold & the customer will be fully refunded, so surely there is no VAT to pay?
     
    Posted: Mar 10, 2021 By: J_A_M_E_S Member since: Aug 11, 2009
    #3
  4. Trevor Andrews

    Trevor Andrews UKBF Regular Free Member

    122 35
    Well I agree, but I think the VAT being supplied is what is known as the "SUPPLY VAT" or IMPORT DUTY, and you are importing back into UK.

    My best advice is to telephone BORIS, he said you could anytime, as its easy really! :)
     
    Posted: Mar 10, 2021 By: Trevor Andrews Member since: Feb 9, 2021
    #4
  5. Mister B

    Mister B UKBF Ace Free Member

    2,488 581
    I would say that there is import VAT to pay, which you should be able to reclaim on your next VAT return. So, effectively becoming a paper exercise.
     
    Posted: Mar 10, 2021 By: Mister B Member since: Aug 31, 2007
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  6. Mr Dibb

    Mr Dibb UKBF Contributor Free Member

    44 5
    As long as the declaration is marked as "Returned Goods" then VAT is not due. Query it with your carrier if they try to charge you it.

    The difficult part is getting your customer to remember to clearly mark it as returned goods not sale.

    We have had 3 so far. One I received a phone call from DHL asking for the outgoing tracking number (to check it really was a return). The others have sailed straight through.
     
    Posted: Mar 10, 2021 By: Mr Dibb Member since: Jun 1, 2011
    #6
  7. J_A_M_E_S

    J_A_M_E_S UKBF Regular Free Member

    121 25
    This is great info. I have no doubt our customer would be happy to mark the goods as such - thank you.
     
    Posted: Mar 10, 2021 By: J_A_M_E_S Member since: Aug 11, 2009
    #7