PreStartup - Import questions/VAT/EORI please

[StephenK]

Hello all,
This is my first post here. I hope it finds you safe, happy and successful .

Me and my fiancee have an idea for selling small ornaments costing about £15 each on a website I am developing (plus Etsy). I can source and import these items from Alibaba from places in China and India. So far so good. I have yet to make my first import.

Where I get confused is the import process into the UK. I read many different pieces of advice from different places. So I think the Uk Business Forums will be my place to ask and learn from

I have read about Notice 143, VAT and import duty. Since, for now, our business will be very small with a maximum turnover of about £15000, I will not need to be VAT registered I don't think and I will have to swallow the VAT upon import as part of my costs. Is that a correct assumption?

So I place an order from manufacturer X,Y or Z on Alibaba. What do they need from me for shipping other than my address (home address by the way - we have no business premises) ? Do they need formal paperwork from the UK side prior to shipment? We are not registered as a company yet. Do we need/have to be?

Do I need to have an EORI number? If so I can apply for this ahead of time.

A simpleton question, forgive me, but how do I pay the manufacturer? International bank xfer?

Will Fedex, DHL ship the items to me Uk side upon release from customs as part of the shipping costs? Or do I need to go collect them from the airport/port/customs house etc?

Do HMRC "know" that you bought this stuff and as such make assumptions about the profits you made from selling them? I ask that to aid my understanding and not to subvert tax obligations

Many thanks for reading and, hopefully, answering my basic questions.

Regards, Stephen

 

[MOIC]

Welcome to UKBF

I have read about Notice 143, VAT and import duty. Since, for now, our business will be very small with a maximum turnover of about £15000, I will not need to be VAT registered I don't think and I will have to swallow the VAT upon import as part of my costs. Is that a correct assumption?

Yes.

So I place an order from manufacturer X,Y or Z on Alibaba. What do they need from me for shipping other than my address (home address by the way - we have no business premises) ? Do they need formal paperwork from the UK side prior to shipment? We are not registered as a company yet. Do we need/have to be?

Full address, Contact name & Contact number + EORI number.

Do I need to have an EORI number? If so I can apply for this ahead of time

Yes

A simpleton question, forgive me, but how do I pay the manufacturer? International bank xfer?

Use Alibaba Assurance (if the supplier has it) or PayPal. DO NOT PAY BY WESTERN UNION!

Will Fedex, DHL ship the items to me Uk side upon release from customs as part of the shipping costs? Or do I need to go collect them from the airport/port/customs house etc?

Any international courier (DHL, FedEx, UPS . . . . .) will deliver to your door. Some will ask for VAT and any Duty payable due on your shipment in advance.

Do HMRC "know" that you bought this stuff and as such make assumptions about the profits you made from selling them? I ask that to aid my understanding and not to subvert tax obligations

Your profits are derived from your purchase cost less your cost of sales (expenses etc), so HMRC will not have all those details, until you include them in your accounts.


Good luck with your business!

 

[StephenK]

Wow, many thanks for the fast reply and answers!!!!

Will our business need to be registered to get an EORI number or can anyone just get one? Seems a few things need to be lined up before ordering stuff.

On another note, I recall in the budget the chancellor made some announcements about small startups to incentivise them. Could there be anything in that for us I wonder? I will research this more.

 

[MOIC]

Wow, many thanks for the fast reply and answers!!!!

You're welcome!

Will our business need to be registered to get an EORI number or can anyone just get one? Seems a few things need to be lined up before ordering stuff.

You may need shipment details, but it's a very simple process.

On another note, I recall in the budget the chancellor made some announcements about small startups to incentivise them. Could there be anything in that for us I wonder? I will research this more.

I'm sure there are members on UKBF that can provide the answers.

 

[StephenK]

With the EORI it's kind of a chicken and egg isn't it? We need an EORI before ordering, and yet need an order to get the EORI....

Is there a charge leveraged by HMRC for the EORI do you know please?

 

[MOIC]

With the EORI it's kind of a chicken and egg isn't it? We need an EORI before ordering, and yet need an order to get the EORI....

Is there a charge leveraged by HMRC for the EORI do you know please?

It doesn't matter when you place your order. You'll need it when you ship the goods and before it arrives into the UK.

No charge to apply for an EORI.

 

[WaveJumper]

https://www.gov.uk/eori/apply-for-eori

 

[Pish_Pash]

I have read about Notice 143, VAT and import duty. Since, for now, our business will be very small with a maximum turnover of about £15000, I will not need to be VAT registered I don't think and I will have to swallow the VAT upon import as part of my costs. Is that a correct assumption?

You don't need to be VAT registered, but you will have to digest some VAT when it arrives in Blarney.

 

[DontAsk]

I have read about Notice 143, VAT and import duty. Since, for now, our business will be very small with a maximum turnover of about £15000, I will not need to be VAT registered I don't think and I will have to swallow the VAT upon import as part of my costs. Is that a correct assumption?

That's input VAT. You will also need to swallow paying 5/6 of all your sales as output VAT if you do eventually register. This will be offset by the input VAT paid. If you intend to grow large enough to pay VAT then you need to think carefully about pricing and margins NOW.

and yet need an order to get the EORI....

No you don't.

 

[StephenK]

Thanks but we are miles away from VAT threshold. Certainly for now. If we get anywhere near it then I will register of course.

I take it that if I am not VAT registered (and have absorbed the VAT charge myself on import of the goods) then I do not need to keep any VAT accounts at all regarding the items I sell? I just sell them with no VAT liability?

 

[DontAsk]

I take it that if I am not VAT registered (and have absorbed the VAT charge myself on import of the goods) then I do not need to keep any VAT accounts at all regarding the items I sell? I just sell them with no VAT liability?

Correct. You do not mention VAT at all. If someone asks for a VAT invoice just explain that you are not VAT registered.

 

[Sara Montanari]

Thanks but we are miles away from VAT threshold. Certainly for now. If we get anywhere near it then I will register of course.

I take it that if I am not VAT registered (and have absorbed the VAT charge myself on import of the goods) then I do not need to keep any VAT accounts at all regarding the items I sell? I just sell them with no VAT liability?

you can voluntarily register for vat even if you are under the threshold depending on how convenient is for you. If you pay a lot of vat on different items and services you need for your business you might want to register so you can claim it back. Even if you don't want to register now you better keep all vat records anyway, because if you are going to register in a few years you can retroactively claim it up to 4 years.