Reclaiming VAT (VAT100 Help)

[mobile_mad]

Hi folks, i'm having a bit of bother with these VAT 100 forms. I'll explain my circumstances first so you can get a better understanding.
I imported stock from Hong Kong to the value of £3537, the duty paid via UPS was £474 and the import VAT was £676.

I want to reclaim the £676 back from the Inland Revenue via the VAT100, but am i right in saying that i'd have to account for the VAT on stock sold?

I've sold £2674 worth of stock so that's almost £468 in sales VAT - would i have to enter both these amounts onto the VAT100? (boxes 1 and 6). Would this mean that i would only be able to reclaim back £208 (£676-£468=£208)?

By the time i've sold all the remaining stock i would end up paying more VAT then i want to reclaim!! I registered on a voulantary basis because i thought i could get back the whole £676 - is there something i'm doing wrong? should i just write the £676 on the VAT100 and £0.00 in all the other columns? or will i have to account for the sales VAT at a later date?

Also, one more thing, if i allow the supplier to put my VAT reg number onto the UPS Air Waybill, will i still have to account for VAT on the VAT100? or will the VAT be logged and removed from the final UPS bill?

I need to reclaim back the VAT in full as i have to pay more for the stock (the supplier only does discounts on orders over 100 - i can't afford this as the stock would then cost around £35,000!). Not claiming the VAT back would make it hard for me to profit from the stock, due to competition from online shops and other sellers e.t.c.

Any help will be most appreciated.

Regards,
Andy

 

[Top Hat]

I've sold £2674 worth of stock so that's almost £468 in sales VAT - would i have to enter both these amounts onto the VAT100? (boxes 1 and 6). Would this mean that i would only be able to reclaim back £208 (£676-£468=£208)?

I'm afraid this is correct, you have to fill out your VAT sales as well as you VAT purchases

So on this quarter you get to claim some back.

It may be best for you to unregister for VAT particularly if you are selling to consumers (this I think takes around 1 month)

 

[mobile_mad]

Hi, makes you wonder how the term 'reclaiming' is actually valid, as the sales VAT would swallow up the VAT you want to reclaim, in almost every scenario!

I'm guessing that if i entered only the amount to reclaim and no sales figures, they'd think i brought the stock for personal use rather than for resale.

Just one more thing (as Columbo would say!) If i had imported from Europe, rather than Hong Kong, would this of had an effect on the VAT or Duty that i had to pay? Would i still have to pay VAT and no Duty? or would both be at a reduced level?

Thanks,
Andy

 

[Top Hat]

I'm guessing that if i entered only the amount to reclaim and no sales figures, they'd think i brought the stock for personal use rather than for resale.

That would almost certainly get you visit from HM customs.

VAT is a tax you are collecting on behalf of the HM Customs, any VAT you charge your customers is not yours, you are simply collecting it.

You can reclaim the VAT on inputs (things you buy)
And charge VAT on things you sell

For most business that means you have to write a cheque to HM Customs every quarter, but it was never your money.



There is no, legal, way out of your hole, the best thing for the future may be to deregister

 

[mobile_mad]

Would i have to account for the sales VAT on the remaining stock? (for the next VAT return), or should i deregister immediately? I don't really want to give them any more money, as my profit margin is already under strain.

I'm hoping to keep the £208 i reclaimed!

 

[Alpha]

Would i have to account for the sales VAT on the remaining stock?

If you stay registered then yes.

If you deregister you will
1) Have to pay over vat on any sales made up to the date you deregister and
2) Pay over vat on any current stock that you have reclaimed the vat on.

 

[Top Hat]

Would i have to account for the sales VAT on the remaining stock? (for the next VAT return), or should i deregister immediately? I don't really want to give them any more money, as my profit margin is already under strain.

I'm hoping to keep the £208 i reclaimed!

I think you would probably have to repay the VAT you have claimed for any unsold stock (but I'm noot 100% sure).

Probably time to phone the HM Customs help line.

 

[mobile_mad]

Thanks for all your your advice guys. Looks like i'll be importing from Europe once i find some good suppliers to compare prices with.

Cheers,
Andy

 

[SuffolkDesigns]

By the time i've sold all the remaining stock i would end up paying more VAT then i want to reclaim!!

Thats how VAT works, the idea is that VAT is paid and reclaimed all the way down the line, so the only VAT that is paid is on the actual profit of the item,(from manufacturer through wholesalers, distruibutors etc) and the last person to buy it pays the full VAT on the item based on the price they bought it for.

If you buy a product for £1 + VAT and sell it for £2 inc VAT in the same month basically what would happen is as follows
1) you would pay 17.5p VAT on the £1 purchase
2) your £2 sale would include 28p VAT
3) you would pay 28p less 17.5p (reclaimed from item 1) = 10.5p