Reclaiming VAT on goods bought through retial outlets, for resale.

[myfirstimportbusiness]

Can someone please tell me if I can reclaim VAT on acquisitions from the EU which come from retailers and not wholesalers?
Of course, these goods are for re-sale by my company in the UK and VAT receipts can be provided for me.

 

[davidshaw89]

are you declaring the goods as you bring them into the country?

buying from retailers seems more suspicious than wholesalers because it gives the impression your sticking them all in the suitcase and hopping on a ryanair flight

 

[elaine@cheapaccounting]

don't see what the problem is as long as you have the required paper work, have paid any duty and the goods are wholly and exclusively for business use.

 

[3pic]

Couple of questions to clarify please :-

1. These purchases from EU retailers. Are the receipts in Euros or Sterling?.

2. Are the EU retailers charging UK or EU VAT rates?.

You can only reclaim UK VAT on UK VAT returnsd and you can only reclaim that VAT if it is in Pound sterling.

If you are acquring the goods via your business, then you should use the reverse charge procedures and purchase the goods VAT free (zero rated).

 

[Zeno]

If you are acquring the goods via your business, then you should use the reverse charge procedures and purchase the goods VAT free (zero rated).

Would he actually be able to do this buying from retail outlets?

 

[3pic]

Would he actually be able to do this buying from retail outlets?

I guess it depends Zeno on the retailer. But the OP hasn't given us enough details to really go on.

I'm assuming the purchases are being mailed to the OP in the UK. If we're saying he is literally walking into PC World in France and buying a laptop then no, it cannot be zero rated as there will be no proff of it going to the UK, but if he is ordering via online say or he has a business account with the retailer, then maybe yes.

Visitors to EU countries can reclaim VAT depending upon a set of circumstances so again, depends where the OP is based/coming from, where he is buying from, vales involved, etc.

I think until the OP can answer the questions I've posed, then we're all just guessing as to the answer.

 

[myfirstimportbusiness]

Thanks for all the replies, I'll elaborate a bit:

The goods are purchased from Belgium. The rate of VAT there is 22%.

I can only buy the goods from a retailer, since authorised wholesalers have exclusivity agreements, which is also the reason I can't buy the goods in the UK.

I found a retailer who gives me as much stock as I need and offers business sales (presumably reverse charge procedures? or possibly just a VAT receipt).

The goods are not for business use, they are for resale.

As a non VAT registered, sole-trader I make a profit. However, if becoming VAT registered meant I could reclaim the 22% I would be increasing my profit margin by 15%.

VAT rates are Belgian rates, and charged in EU. So I am trying to reclaim the Belgian VAT.

Not quite Ryan-Air, but I am transporting the goods myself, this is the most cost-effective way since the retailer in Belgium is closer to me than Manchester.

Will I need to register a company in Belgium in order to qualify for reverse charge procedures, and then export to my UK company?

 

[3pic]

If you are collecting the goods directly from the Belgium retailer then the retailer is making a supply of goods in Belgium and he will have to charge you Belgium VAT.

Even if you were dealing with a wholesaler, the zero rating can only apply when the goods are dispatched to another EU member-state with the appropriate evidence (ie, shipping note, UPS carrier receipts, etc). Your flight tickets are not sufficient proof I'm afraid.

 

[Zeno]

Other than VAT, grey market trading is not the best way to run your business. For example, the manufacturer of the goods may find out about what your are doing (Tip off from the UK authorised sellers perhaps) and then refuse to supply either of you. You will then never be given the option of becoming an authorised seller.

There is also the issue of warranties and guarantees. How do you deal with this at present?

 

[myfirstimportbusiness]

Other than VAT, grey market trading is not the best way to run your business. For example, the manufacturer of the goods may find out about what your are doing (Tip off from the UK authorised sellers perhaps) and then refuse to supply either of you. You will then never be given the option of becoming an authorised seller.

There is also the issue of warranties and guarantees. How do you deal with this at present?

The warranty for these goods is not tied to the receipt, although we do offer a free service whereby we can handle warranty issues on behalf of customers.

I may get blacklisted by the manufacturer but this is a risk I am prepared to take. The supplier is too big to be blacklisted.

So, does anyone know if I'll be able to reclaim the VAT and charge UK VAT (should I become VAT registered) based on the information I have provided?

 

[Zeno]

The warranty for these goods is not tied to the receipt, although we do offer a free service whereby we can handle warranty issues on behalf of customers.

I may get blacklisted by the manufacturer but this is a risk I am prepared to take. The supplier is too big to be blacklisted.

So, does anyone know if I'll be able to reclaim the VAT and charge UK VAT (should I become VAT registered) based on the information I have provided?

I am afraid you would seem to be in the situation of having to charge UK VAT (If over the threshold) but cannot recover the foriegn VAT suffered.

 

[3pic]

You can only reclaim UK VAT (ie, 15%) in £ sterling so if you are buying goods from a retailer in Belgium the VAT receipts will have Belgium VAT on them (probably in Euro's too) so you cannot reclaim any foreign VAT via a UK VAT registration.

(that's becuase the belgium VAT man gets the VAT you've paid the belium retailer, but the UK VATman has nothing so to give you a refund means he is out of pocket - which is why the VAT system has mechanisms to avoid this disparity - which we've already described to you).

You cannot have those receipts zero rated either for reason outlined in my previous email (ie, you are taking them on a plane, so not a true dispatch from the retailer to the UK customer).

You can certainly register for VAT in the UK if you are making supplies to customers in the UK and you would charge VAT to your UK customers of course, but your input tax will be restricted to supplies you purchase in the UK (ie, none by the sound of things as all your inputs are Belgium VAT which you cannot reclaim via UK VAT return).

You could register for VAT in Belgium but they'd only allow that if you were making taxable supplies from Belgium, which you are not as you are taking the goodsto the UK and supplying from the UK so Belgium may take the view that you are not making any sales in Belgium and therefore you have no right to register for VAT there.

I suppose you could go down the route of an 8th Directive reclaim, whereby you submit expenses incurred in Belgium to the Belgium authorities using a form (the UK call it VAT65) but you can only usually do this once or twice a year as the admin can be a right pain to do and there are certain limitations to making 8th Directive reclaims (from Jan 2010, you'd be able to submit electronically via the UK/Enlish websiote but until then, you'll need to get a grip of the Belgium language). This is also on the basis you are VAT registered in the UK.

 

[myfirstimportbusiness]

OK, understood. I just thought there was an EU wide VAT system, and I could perhaps register for an EU VAT number.

Since there's not, I guess the answer is simple. Once my sales reach the threshold, relocate the business to Belgium! I am an online retailer, so why not ei? I will be moving to Paris in September, so I could quite easily base my business is Belgium for administrative purposes and mail goods from there. Then I would no longer be liable for UK VAT right?