Should I register for VAT?

N

norrevangs

Guest
I am going to start a small business importing goods from the UK for resale over the Internet. What are my VAT obligations? Do I charge VAT on my goods if I am not VAT registered? I don't expect to exceed the threshold for VAT so should I volountarily register? Am I correct in thinking that if I don't register I will have to pay the 17.5% UK VAT?
 
norrevangs said:
I am going to start a small business importing goods from the UK for resale over the Internet. What are my VAT obligations? Do I charge VAT on my goods if I am not VAT registered? I don't expect to exceed the threshold for VAT so should I volountarily register? Am I correct in thinking that if I don't register I will have to pay the 17.5% UK VAT?
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Some additional info would help in answering this.

I understand that you will not exceed the threshold limit for the sale of goods, however,

Will you exceed the threshold limit for registration in respect of intra-community acquisitions , i.e acquisition of goods from another EU Country, currently €41K ?

In making any decision to voluntary register, who are your customer likely to be? Unregistered persons with no VAT recovery or VAT registered person with VAT recovery? This will impact on any commercial decision.

Will your customers be all Irish resident?

It's a bit complicated to just give a yes or no answer.
 
Thanks for the responses so far. I realise it is complicated thats why I asked as I was getting lost in all the revenue literature.

I can not see myself exceeding the 41K limit in my first two years at least.

My customers will be individuals who are unlikely to be VAT registered

I expect to mainly sell to Irish people but as its the Internet I would be happy to ship the clothes to whoever will buy them!
 
It's not complicated at all - certainly not in comparison to other aspects of running any business. It's just book keeping and discipline. It's up to you I suppose - if you think you can pass on the VAT you can't reclaim to your customers and still be competitive, and you don't have to register, then I suppose you shouldn't bother. You'd have to do the maths.
 
norrevangs said:
... Am I correct in thinking that if I don't register I will have to pay the 17.5% UK VAT?
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It's 15% since 01/12/2008 and you will have to pay it if you are not registered.

If you can afford to pass on the 15% UK VAT to your customers as a purchase cost (which it is as you can't reclaim it), put you margin on top and not charge 21.5% VAT, it will give you a pricing advantage over a VAT-registered reseller who has to charge VAT.

Do the sums, ignoring shipping costs and currency fluctuations for now.

Not registered
Price 10, UK VAT 15%, Purchase price 11.50
Sales Mark-up 20% on 11.50 = 13.80

Registered
Price 10
Sales Mark-up 20% on 10 = 12.00
VAT inclusive price 12.00 X 1.215% = 14.58
 
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