UK based company - dropshipping from China

Discussion in 'International Business' started by Tomhunventure, Jul 19, 2019.

  1. Tomhunventure

    Tomhunventure UKBF Newcomer Free Member

    2 0
    Hi everyone,
    This is Tom. I've a UK based business.
    I'm new on the market, and I don't want to be VAT registered voluntarily, so I'm wondering, how is it possible to manage "dropshipping from China all around the world (mainly UK and USA)" process (without VAT registration)
    Is it possible without VAT registration at all ?
     
    Posted: Jul 19, 2019 By: Tomhunventure Member since: Jul 19, 2019
    #1
  2. Mr D

    Mr D UKBF Legend Free Member

    18,457 2,128
    Yes.
    Until you start hitting thresholds. Different countries have different distance selling thresholds in Europe.
     
    Posted: Jul 19, 2019 By: Mr D Member since: Feb 12, 2017
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  3. Tomhunventure

    Tomhunventure UKBF Newcomer Free Member

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    You mean to hit the VAT registration threshold? in UK based business case it is 80 000 pounds/year .
     
    Posted: Jul 19, 2019 By: Tomhunventure Member since: Jul 19, 2019
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  4. Mr D

    Mr D UKBF Legend Free Member

    18,457 2,128
    Selling in the UK you may find buyers from other countries purchasing too.

    Watch out for returns and refusal of delivery.
     
    Posted: Jul 19, 2019 By: Mr D Member since: Feb 12, 2017
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  5. MarkHenry19

    MarkHenry19 UKBF Newcomer Free Member

    19 2
    Helpful thread! I was searching for the same information. Thanks a lot.
     
    Posted: Jul 20, 2019 By: MarkHenry19 Member since: Jul 13, 2019
    #5
  6. CHUKTC

    CHUKTC UKBF Regular Free Member

    100 16
    If you are shipping in any volume to the UK you will require an EORI number. Its free and you can apply to HMRC to get it https://www.gov.uk/eori but there is a catch - you need to register for VAT so contrary to the above advice I think you will find you do need to register for VAT
     
    Posted: Jul 26, 2019 By: CHUKTC Member since: Jan 2, 2019
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  7. Tom Gardner

    Tom Gardner UKBF Contributor Free Member

    58 4
    Posted: Jul 26, 2019 By: Tom Gardner Member since: Dec 9, 2017
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  8. Mr D

    Mr D UKBF Legend Free Member

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    Is that a new thing?

    I have an EORI have used multiple times for importing stuff. Without needing to register personally to charge myself vat.
     
    Posted: Jul 26, 2019 By: Mr D Member since: Feb 12, 2017
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  9. Tom Gardner

    Tom Gardner UKBF Contributor Free Member

    58 4
    There has always been the facility, in the UK, for non-VAT registered businesses to import and Export
     
    Posted: Jul 28, 2019 By: Tom Gardner Member since: Dec 9, 2017
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  10. Mr D

    Mr D UKBF Legend Free Member

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    Yes that was the impression I had from own experience but been a while since imported using it.
     
    Posted: Jul 28, 2019 By: Mr D Member since: Feb 12, 2017
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  11. light after the dark

    light after the dark UKBF Newcomer Free Member

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    I had spoke to HMRC about dropshipping into the UK recently (i'm also waiting for a written reply) but from what they have said to me.

    **applies to drop-shippers only - this does not cover importing goods for sale at markets, in store or importing to yourself/storage and then sending them on to your customers.**

    you don't need an EORI as a dropshipper as technically you are not the importer, you customer is. This is because you never have physical possession of the goods and they go from your supplier abroad straight to your customer. It's your customers name on the parcel.

    What this also means is that you customer is legally liable for and VAT and DUTY charges upon the goods arrival in the UK. You can put this in your "shipping terms" and ask them to contact you to organise a refund for anything they have had to pay.

    For goods coming from outside of the EU, VAT applied to Goods above £15 in value is the threshold I believe) and Customs duty for good valued above £135 (includes shipping, insurance costs applied to the good).

    You don't have to be VAT registered to have a EORI number nor do you need to have a EORI as a drop-shipper only.

    I have suggested to HMRC that they create a drop-shippers number similar to the EORI that would take the liability away from your customers, but this would only work if the suppliers abroad make sure this number is on the package every-time.

    I hope this helps and please do correct me if your aware of anything different/incorrect.
     
    Posted: Sep 26, 2019 By: light after the dark Member since: Sep 26, 2019
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  12. Tom Gardner

    Tom Gardner UKBF Contributor Free Member

    58 4
    Well if that is what HMRC has advised, and they are confirming in writing then you are good to go. I doubt they will create an EORI category for this scenario as the liability lies with the customer.
     
    Posted: Sep 26, 2019 By: Tom Gardner Member since: Dec 9, 2017
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  13. Mr D

    Mr D UKBF Legend Free Member

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    Your customers can also refuse to take delivery of goods with VAT plus admin charge to pay. Then contact you for a full refund including shipping costs. What happens to the goods is your problem then.
     
    Posted: Sep 26, 2019 By: Mr D Member since: Feb 12, 2017
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  14. light after the dark

    light after the dark UKBF Newcomer Free Member

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    I know, I don't like the prospect of that either but HMRC have no facility here for drop-shipping into the UK. hence why few do it and most target the US markets instead. As much as it is a pain, I do offer to refund any costs hit by landing in the UK and as long as my goods are under the threshold I shouldn't need to, but does limit what you can sell and for how much, just to avoid it.
     
    Posted: Sep 26, 2019 By: light after the dark Member since: Sep 26, 2019
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  15. Mr D

    Mr D UKBF Legend Free Member

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    Few?
    Plenty do it. Just has some risks.

    Problem you would have even with keeping goods below threshold is people wanting multiples.
    I sell mostly single items, a few I put into packs too. Probably 20% of my orders are for multiples - half my orders so far today are multiples.
     
    Posted: Sep 26, 2019 By: Mr D Member since: Feb 12, 2017
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  16. light after the dark

    light after the dark UKBF Newcomer Free Member

    4 0
    Now i'm interested, what you typical price bands and how do you deal with customs and vat? I'm relatively new to it so always learning. what I've wrote is what I've found so far that's a potential issue (depends how customer reacts to be fair)
     
    Posted: Sep 26, 2019 By: light after the dark Member since: Sep 26, 2019
    #16