Dropshipping and VAT

[silverfirefly]

Hi,

I've searched already but don't want to necro really old threads.

I'm using Aliexpress to dropship items to customers in the UK. Since the items are shipped directly to UK customers from China, and my customers are responsible for paying fees associated with Customs Duty, including VAT that is owed, how should I handle VAT when the time comes? Royal Mail will be collecting the fees owed for Customs Duty, VAT, plus their handling fee.

 

[Mr D]

Until you register for VAT as a business you ignore the VAT as you are not collecting it. Would be illegal for you to try.

However if the buyer gets a bill for VAT plus duty plus £8 handling charge they may not be happy - and if bill presented before they get the goods they can refuse to pay it.
And demand a full refund from you. Which they will get.

 

[silverfirefly]

They won't get billed for any applicable fees by Royal Mail or whichever courier is used until the goods arrive on their doorsteps. So they will need to pay up before the postie or courier hand their packets over. Otherwise they can refuse, but the goods will be returned to sender and they'll get a refund, minus the shipping - which is standard. I've checked about this and it's correct.

However, that isn't my question. My question is, if Customs collect VAT from my customer, how is that handled in my business? VAT can't be collected twice.

 

[Chris Ashdown]

Assume you are drop shipping, why not buy in bulk to your place of work and then you can offer your customers a 24/48 delivery and any import duties etc are directed to your company. I personally wold not order from a UK company and expect to have something delivered from China x number of weeks later and have a unknown bill to pay

 

[Scalloway]

if Customs collect VAT from my customer, how is that handled in my business?

It isn't anything to do with your business, it is for the customer to deal with.

 

[Mr D]

They won't get billed for any applicable fees by Royal Mail or whichever courier is used until the goods arrive on their doorsteps. So they will need to pay up before the postie or courier hand their packets over. Otherwise they can refuse, but the goods will be returned to sender and they'll get a refund, minus the shipping - which is standard. I've checked about this and it's correct.

However, that isn't my question. My question is, if Customs collect VAT from my customer, how is that handled in my business? VAT can't be collected twice.

That's all right, they can go to the payment processor or card company for the rest.

 

[silverfirefly]

It isn't anything to do with your business, it is for the customer to deal with.

It is when my business reaches the VAT threshold and I have to register for VAT. So when my business reaches the threshold, how to handle it then?

That's all right, they can go to the payment processor or card company for the rest.

No, they can try, but unlike a lot of smaller fish, I will challenge and present evidence. Plus there's that clause in my terms which says that due to the nature of business, customer agrees to to take responsibility and pay the Duty and VAT bill when their goods arrive, and that I and the supplier are not liable for it. The customer agrees to the terms upon purchasing, which they do by ticking a box on the checkout page. If said customer refuses to pay any Duty and VAT owed after agreeing to the terms, they'll get a refund once the goods are received, MINUS the shipping costs. Even payment processors and CC issuers understand the importance of contracts. And there's always small claims if it becomes necessary.

Never assume that you'll win every time you lie to get your money back. It's arrogant, and eventually you get your butt kicked by someone who is smarter than to let a thief get away with it.

Don't know what's the matter with people - can't get a frickin' straight, on-point answer around here. Useless.

 

[Scalloway]

It isn't anything to do with your business, it is for the customer to deal with.

It is when my business reaches the VAT threshold and I have to register for VAT. So when my business reaches the threshold, how to handle it then?

At the moment you have no connection to the person making the delivery so in my opinion the VAT the customer pays has nothing to do with you. You do not have to account for it at the moment.

I had a quick google on the subject and the recommendation is that you hire a courier to make deliveries on your behalf. They will deal with VAT when the goods reach the UK and will provide documents to allow you to reclaim the VAT paid on import. You will then invoice your customer with the net price plus VAT which you will account for.