Importing and vat

[paulcan44]

A friend of mine in NZ runs a buyers group where they all club the money together and buy the stone at cheaper rates.
I want to do the same here - be an agent or middleman where I just take their money and order the stones for a 10% fee.
My problem is how do I sort out VAT. When it arrives it will be put through as a single input (multiple inputs would inflate the cost too much to make it viable and anyway, the idea is to share the costs).
On one input, you get charged the VAT (and recieve a certificate a month later) how do I divide the VAT and send the totals to my customers so they can claim it back? I am not VAT registered at the moment.

I have left problem with my accountant to sort out but I would appreciate input over the weekend from you experts!

 

[dingbat]

Your customers can't claim it back since they never paid the VAT, you did. Your best bet is to become VAT registered.

BTW What is 'buying the stone'. Is this some kind of slang?

 

[paulcan44]

Your customers can't claim it back since they never paid the VAT, you did. Your best bet is to become VAT registered.

BTW What is 'buying the stone'. Is this some kind of slang?

Stone=granite. As in memorials and other items.

 

[paulcan44]

Your customers can't claim it back since they never paid the VAT, you did. Your best bet is to become VAT registered.

BTW What is 'buying the stone'. Is this some kind of slang?

Can I do that and remain an agent - I pay the vat on the goods imported and reclaim it later only? I dont want to be an importer and have to lay out thousands (too faint hearted) the idea is my buyers will foot the bills in return for cheaper granite.

 

[RAL]

Can I do that and remain an agent - I pay the vat on the goods imported and reclaim it later only? I dont want to be an importer and have to lay out thousands (too faint hearted) the idea is my buyers will foot the bills in return for cheaper granite.

It is good to hear that you are going to see an accountant, but just ensure that he knows about import and its complications. Import, import vat and agent is complex area, I recommend to see vat expert some one like Kevin Hall, who is a member here. I am sure if he sees your post he will definitely try and help you.

 

[paulcan44]

It is good to hear that you are going to see an accountant, but just ensure that he knows about import and its complications. Import, import vat and agent is complex area, I recommend to see vat expert some one like Kevin Hall, who is a member here. I am sure if he sees your post he will definitely try and help you.

Thanks, if anyone knows Kevin then can you ask him to help me?

 

[Kevin Hall]

There is too much that is unclear here. I would see what your accountant says first.

There are ways of remaining as an agent and recovering the VAT ("undisclosed agency"), but you would have to ensure your agreements and practice were in line with the rules for this. But you would have to charge VAT on your supplies to your Principals (i.e. the others for whom you act as agent). This is OK if they are VAT registered, but not if they cannot reclaim the VAT.

Alternatively, you might enter into a partnership (or a "Joint Venture" with the others and have it deemed as a partnership for VAT purposes), so that there is no onward supply on which VAT is charged, but there is VAT recovery. However, you would have to prove that there are onward supplies by this "partnership" otherwise VAT cannot be recovered on the purchases.

As I say, there are some complex issues here, which need to be settled according to the fixed needs of all the stake-holders in the structure. So do talk to your accountant first, as he might already be aware of all these options. Otherwise, you might need formal specialist help on this.

 

[paulcan44]

Thanks Kevin.
I do prefer the first method (VAT "undisclosed agency"), as all my buyers are VAT registered. I am not VAT registered so should this matter?
It is something to talk about when I have a meeting and will report back soon as I get full confirmation on the fuller facts.
Many thanks,
Paul.

 

[Kevin Hall]

You can only recover VAT on purchases if you are registered for VAT. You are obliged to register for VAT when your sales (including the value of the goods, as these will technically be "sales" for VAT purposes, even though they belong to the other businesses) exceed the UK VAT REgistration threshold (currently £67k) in any 12 month period.

However, it might be in your interest to register for UK VAT voluntarily (i.e. before your sales total reaches the threshold), as you can recover VAT on the goods and also on other purchases (telephone bills, advertising costs, maybe even some motoring costs) and your customers can recover the VAT you charge to them.

But there are still details to sort out, such as the cashflow and the requirement to complete VAT returns, which might be an extra cost from your accountant. So yes, do talk to your accountant first.

Hope this gives you a heads-up before your meeting. Good luck!

 

[paulcan44]

Thanks Kevin, I am currently VAT registered with a partner but I am leaving the partnership in a weeks time. Do you think I can be fast tracked to getting my VAT registration for another business!?

Thanks for the headstart, currently googling VAT undisclosed agency.

 

[Kevin Hall]

No, there is no fast-tracking for VAT registrations. However, your accountant can get you registered for VAT with effect from your first day of business if this was relatively recent. Raise these issues with them and see if they are able to answer all your queries.

Good luck!