business operation with no VAT

Would be grateful if you advise me about my possible business operation module

I PAYE working full time also running small company making farm equipment.

I’m not VAT registered.

I have a few agricultural shops who might be willing to sell my product.

They all VAT registered.

Can they sell/stock my product on behalf of my company and provide the customer with my invoice (I'd have to leave some invoices with them) so they don't have to charge the VAT? In exchange I would then give them 10% of the sale?

Is the above officially allowed and how would I show the 10% commission to the agricultural shop, if the invoice came from me?

My accountant said this practice is strictly against the Revenue rules and did not advised to do that way.

The agricultural shop will sell the product so they will charge VAT and issue a VAT invoice to the customer. You would then invoice the agricultural shop for the wholesale price of the product (without VAT as you're not registered).

Not sure if your idea is legal or not, but I can't see any shop agreeing to work like that. What happens if there's a problem and they need to refund the customer?

There is an option to register for VAT even if you don't hit the thresholds. Depends if your potential customers are VAT registered, so they can in turn reclaim the VAT.

The shop is not selling the machinery as such, you are. Let's assume you hire them as an agent - i.e. the commission, and they advertise the product, maybe stock a sample, and put customers in contact with you directly. Not an area I'm familiar with, thinking aloud somewhat. Why exactly did your accountant say the idea is against Revenue Rules?

Absolutely against Revenue Rules. The shops selling the product are obliged to charge VAT on sales and cannot get around this by issuing invoices on your headed paper. proposal made by Klaus Flouride is somewhat practical but realistically you need to register the business for VAT yourself. You will be able to offset VAT on your raw material etc against VAT charged to the clients. They are presumably farmers who can reclaim the VAT themselves.

44brendan said:

They are presumably farmers who can reclaim the VAT themselves.

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Not sure if small farmers register for VAT in general, so that may be an issue. Income, rather than stature, obvs.

KlausFlouride said:

Not sure if small farmers register for VAT in general, so that may be an issue. Income, rather than stature, obvs.

Click to expand...

Most farmers don't register for VAT because they get a flat rate addition on their sales. So I think thats the OP issue. Farmers get the VAT back on Cap Ex but not machinery.

The agricultural shops would never buy or sell the physical good, they would act as a sales agent. I'm guessing it's a common & legitimate commercial arrangement.

The OP needs to put their sales agency proposal to a few shops to see if its a runner. Let them look after the practicalities of their own bookkeeping in that case.