Starting up kids clothes business - what do I need to know?

[hc90]

Hi, I have recently started a Facebook page selling kids clothes and am in the process of building a website. I know that I need to register as a soletrader but I’m confused as what else needs to be done.

I am currently importing clothes from China as I have found some good quality sellers on the wholesale sites, however I am now worried that this isn’t legal or not allowed. I know I need to keep a record of all stuff ordered (which I have), but the items are coming through without me having to pay custom charges.

How will I put this through when I need to do a self-assessment or tax return (whichever it is I need to do). I know kids clothes don’t have VAT over here but what other charges and stuff do I need to be aware of?

I am currently working full time but am due to go on maternity leave, hence why starting this small business up, to bring extra income in. How much will this affect my tax credits?

I want to do everything legit so all advice would be greatly appreciated.

 

[@aiteoconsulting]

Hello,

Have a read through this page, if you haven't already - this covers importing from non-EU countries.

https://www.gov.uk/starting-to-import/importing-from-noneu-countries

You would normally have to pay import duty, and VAT at UK rates, on imported goods.

 

[hc90]

Thanks, I did have a look through that and it still confused me.

I used the duty tax calculator online and it said anything under £135 I wouldn't have to pay VAT on as it's kids clothes.

However, when I order from China, they seem to send it as a 'gift' and I never get charged a customs fee or any other fees.

 

[@aiteoconsulting]

Yes, but you are importing it for trading purposes, not as a gift. Your suppliers are marking it as a 'gift' to avoid import fees being imposed upon arrival - but don't be tempted to wait for HMRC to realise you're importing for trade purposes, otherwise they'll eventually come after you.

https://www.gov.uk/guidance/customs-seizures-and-penalties

I'm haven't looked at the detailed VAT regs on childrens' clothes & definitions recently, but my understanding is that there may be no import VAT applicable as childrens' clothes are zero rated in the UK.

 

[hc90]

Oh I know that, that's why i'm asking for advice as I don't want to be stung by HMRC.

So if there is no import VAT applicable, am I doing everything correctly? Or are there other charges I need to be aware of?

I am planning on sitting down this weekend and registering it all with HMRC before I start selling anything, but just need to know what kind of extra charges I could be looking at.

 

[@aiteoconsulting]

If you register it with HMRC, they'll let you know about import duty and clarify the position on VAT. Others may be along here later to advise in respect of any other costs that might arise.

All the best!

 

[hc90]

Thanks so much for your help!