Reclaiming VAT for goods bought in EU, but sold outside EU?

Discussion in 'Accounts & Finance' started by Hanako, Sep 8, 2019.

  1. Hanako

    Hanako UKBF Newcomer Free Member

    5 0
    Hi there,

    I recently moved to the UK and have registered as self employed and got a VAT number for the business I am running. Basically, my business is buying luxury clothes goods in the UK but mostly other EU countries, to then sell to customers in Japan through a website there.

    I am trying to figure out what I need to do when it comes to filling in my first VAT return which is due in mid October.

    Basically, as I believe it with my situation, boxes 1 and 2 on my VAT return will be 0? As I am selling to customers in Japan so no VAT is due on my sales. However, box 2 is kind of confusing me. I pay VAT from my acquisitions of goods in the EU at the time I buy them, so why then would I still owe any VAT on any EU acquisitions?

    That brings me onto box 4, where I thought I would be able to claim back the VAT I had paid on all of the goods I had bought from EU countries, however it states 'can reclaim on acquisitions of goods from VAT-registered suppliers in other EU member states (this must correspond with the amount declared within box 2)' on VAT notice 700/12

    So basically, I cannot put an amount of 0 in box 2 and then put an amount in box 4 for VAT reclaim from EU countries?

    I remember reading on another government page that goods bought from EU member states for the purpose of reselling (as I am doing), are not VAT reclaimable. I rang up HMRC about this to ask them but the lady on the phone didn't seem to know what I was talking about.

    Can someone please help me clear this up? Basically, I am confused about what VAT I can or cant claim back and what VAT will be due in my VAT return. As I understand it, I wont be due to pay any at all, and will only have VAT to claim back for all the stock I've bought? Have I misunderstood?

    Thanks for any help you can provide!! :)
     
    Posted: Sep 8, 2019 By: Hanako Member since: Sep 8, 2019
    #1
  2. Scalloway

    Scalloway UKBF Legend Free Member

    15,332 3,242
    Posted: Sep 8, 2019 By: Scalloway Member since: Jun 6, 2010
    #2
  3. Mr D

    Mr D UKBF Legend Free Member

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    Did you provide the VAT number to the supplier before purchase?
     
    Posted: Sep 8, 2019 By: Mr D Member since: Feb 12, 2017
    #3
  4. Karimbo

    Karimbo UKBF Ace Free Member

    1,718 174
    Because of the cost, paperwork and complication of reclaiming eu vat they have usedca zero rate vat on cross eu sales as long ad you are vat registered. It does not matter whether you are reselling or using the products within your business. But the zero rate must be done before the sale and not through vat returns like inland vat is done.

    If you have bought items and not asked for zero rating from seller, there isnt any effective way of reclsiming vat. I know there are vat refund requests forrom member states, but theyre not effective. I tried to claim 109 euro netherlands vat and i never heard back from them.

    There is no vat on export to non eu customers so enjoy your vat free sales
     
    Posted: Sep 9, 2019 By: Karimbo Member since: Nov 5, 2011
    #4
  5. Hanako

    Hanako UKBF Newcomer Free Member

    5 0
    Hi, thanks for your reply. Is there a page where I can read about zero rated VAT? I just asked one of my suppliers if it is possible to zero rate the VAT (from Spain), but they basically ignored my question and just said all sales have to conform to their terms, which do not seem to mention it.

    The places I am buying from are normal retail stores so just normally selling to consumers so this may be unusual for them to offer a sale without VAT. But in your sitatuion, do you just simply say that you are buying the product for business purposes and provide your company/VAT information and then they offer the product/service to you VAT free?

    Thanks again for your help
     
    Posted: Sep 9, 2019 By: Hanako Member since: Sep 8, 2019
    #5
  6. Hanako

    Hanako UKBF Newcomer Free Member

    5 0
    Nope, not on my previous purchases, but it is something I will start doing from now on.
     
    Posted: Sep 9, 2019 By: Hanako Member since: Sep 8, 2019
    #6
  7. Hanako

    Hanako UKBF Newcomer Free Member

    5 0
    Hi, thanks for your reply. I had a read of that link and found this about zero rated VAT:

    "Goods imported to free zones
    Free zones are designated areas where you can store goods from outside the EU without first paying import duties and import VAT. This is because they are treated as if they’re outside the customs territory of the EU.

    If you supply goods and services to a customer within a free zone, then you should treat them as UK supplies. They will be subject to normal domestic VAT rules. However, there is an Extra Statutory Concession that allows goods supplied in a free zone to be zero-rated - but only on condition that the supplier and the customer have agreed that the customer will clear the goods for removal from the free zone, and will pay the import VAT."

    This however refers to the import of goods from outside the EU? Whereas in my situation I am importing goods from the EU into the UK to then export to Japan to sell. So maybe I've misunderstood, but it doesn't appear applicable to my situation? Thanks :)
     
    Posted: Sep 9, 2019 By: Hanako Member since: Sep 8, 2019
    #7
  8. Mr D

    Mr D UKBF Legend Free Member

    17,450 1,969
    You have less than 2 months, after that the VAT issue may be subject to change.
     
    Posted: Sep 9, 2019 By: Mr D Member since: Feb 12, 2017
    #8
  9. Scalloway

    Scalloway UKBF Legend Free Member

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    Posted: Sep 9, 2019 By: Scalloway Member since: Jun 6, 2010
    #9
  10. Hanako

    Hanako UKBF Newcomer Free Member

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    Oh yes I understand that, but even now it still seems like nobody really knows what is going to happen haha! I still don't really understand the implications of no deal on my business but hopefully all will become apparent soon!
     
    Posted: Sep 9, 2019 By: Hanako Member since: Sep 8, 2019
    #10