Mobile Phone Wholesale Marginal Vat / Non VAT Registered

[psychoe3]

I recently started trading in Mobile Phone Wholesale

I am considering buying phones from a UK non vat registered business every transaction will be around £7000 each time.

I am Non Vat Registered at the moment

From reading the forums I gather at this moment in time I do not need to pay vat on my purchase and I also do not need to charge VAT to my customers is this correct ?

 

[Mr D]

You pay VAT when you are charged it by a supplier. As they are not registered they cannot charge you VAT. As you are not VAT registered you cannot charge your buyers any VAT.

Unless your supplier is just supplying you and on an occasional basis it would be unusual for them to be selling £7k at a time and not hitting the £85k VAT registration limit in a 12 month period.

Once you as a seller are about to hit that limit in a rolling 12 month period for sales then you register for VAT and collect it from your buyers. They are the ones paying it, you collect it and hand it to HMRC.

 

[psychoe3]

Thanks for your clear reply

Scenario 2

If my supplier was VAT registered they would charge me VAT

If I was VAT registered then I would charge my buyers VAT

However in this scenario I could reclaim the VAT back that my suppliers charged me ?

 

[Mr D]

Thanks for your clear reply

Scenario 2

If my supplier was VAT registered they would charge me VAT

If I was VAT registered then I would charge my buyers VAT

However in this scenario I could reclaim the VAT back that my suppliers charged me ?

Depends.

Standard scheme then yes you would offset relevant VAT paid out against VAT collected with HMRC getting the difference.
The standard scheme is one of the schemes. There is a fixed rate scheme open to small businesses up to a point. It ignores VAT paid and works out the VAT to pay HMRC by a simple percentage, ignoring what you collect.

 

[MBE2017]

Just to add, HMRC really look at VAT on mobiles in great detail since there has been so much fraud, I know of one company which almost went under whilst goods, invoices etc were looked into. It can cause a lot of cash flow and supply problems.

 

[STDFR33]

I recently started trading in Mobile Phone Wholesale

I am considering buying phones from a UK non vat registered business every transaction will be around £7000 each time.

I am Non Vat Registered at the moment

From reading the forums I gather at this moment in time I do not need to pay vat on my purchase and I also do not need to charge VAT to my customers is this correct ?

If you are not charged VAT, there is no VAT to recover.

If you are not VAT registered, you cannot recover VAT.

If your taxable supplies exceed £85,000 in a rolling 12 month period, then you must register for VAT.

If you are VAT registered you must charge VAT to your customers.

 

[psychoe3]

Thanks for all your replies on this.

Just to clarify something I am dealing with used mobile phones.

Does this change the situation, since VAT has already been paid on them at one point time.

 

[psychoe3]

some suppliers also offer to sell on reverse VAT what is this ?

Does this mean if I am VAT reg and then sell to the public I will not charge them VAT ?

 

[MBE2017]

New one secondhand makes no difference, VAT compulsory registration is based on turnover.

Whether you pay vat on your supplies will not matter, once you become registered you will have to charge for the VAT for the difference between your cost and selling price, so assuming you do well once registered you will lose a sizeable chunk of your selling price. Basically you become an unpaid tax collector.

 

[lesvatadvice]

This is the link to the HMRC Notice about the Reverse Charge for mobile phones: https://www.gov.uk/government/publi...everse-charge-on-specified-goods-and-services
You should note that HMRC require you to do robust checks into suppliers and customers. Any failure to do this will leave you liable to loss of input tax. You should speak urgently with a specialist in relation to this. I can recommend this firm: http://www.vincentcurley.com/services/due-diligence/