Questions about VAT.

[Hetzer]

Help, need want.

Ok, the UK-GOV site is about as much use as Viagra in a convent. If I buy a bunch of stuff from china, I have to pay duty and VAT. If I'm not VAT registered I don't have to charge my customers VAT but I'm supposed to record VAT as part of the final price? Er...come again?

So let's say I sell my item for £100. Do I mark the price as £80 + £20 VAT but I don't have to give that £20 to HMRC? Or do the cunts charge me 20% import VAT and then want another 20% of the price for which I flog the item?

TIA to any experts who understand this gobbledegook. Shiny shinies await you.
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"There's the horizon! Ride hard, ride fast and cut down all who stand in your way!"

[bamt]

If you are not VAT registered, then you cannot claim back the input tax (that you paid on import). You should not charge VAT to your customers, nor should you break down the price to make it look like you are. You don't pay HMRC anything (other than normal tax on your income).

So, you buy your widget for £20 plus duty plus VAT plus royal mail handling charge - say £10, for simplicity.

You advertise and sell for £100.

You put £100 in your bank account, then when you do your accounts you put the £20 and £10 into your accounts as costs and £100 as sales, so you pay income tax on £70.

VAT doesn't come in to it at all (except for what you pay on the way in).

Once your turnover exceeds the threshold, then you’d have to charge VAT on your £100 - so your item becomes £100 + VAT, but you can claim back the VAT you paid on the way in - which you do by taking off your input tax from the sales tax and give the difference to HMRC. So, for this item, if you paid £4 VAT on the way in, and charged £20 to your customer, you give HMRC £16 (plus, of course, tax on your profits).

[ScaredyCat]

You pay import duty based on the TARIC, you'll always pay the VAT on imports from china. Careful, but accurate commodity code selection can help avoid import duty.

Use this to narrow down the code to use for import. Look carefully, some items may fall into multiple categories (by your definition of the product) some of have zero tariff some do not. Also be careful because they keep changing which ones attract the tariff - one month you might be ok, the next they may have changed it.

You're looking for "Third country duty" with a value of 0%
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Honda CBF125 ➝ NC700X
Honda CBF125 ↳ Speed Triple

[Diggs]

The easiest way to think about it is that if you aren't VAT Registered, you forget about VAT.

If you buy something that costs you £100 then it costs you £100 irrespective of how the £100 is derived, VAT-wise.

Likewise if you sell something for £100 and you aren't VAT Registered then you simply sell it for £100, no VAT.

Once your turnover looks like it I going to exceed £83,000 only then are you required to Register for VAT. It is at this point that you need to speak to an accountant as shit gets serious if you cock it up and the Revenue come after your. Once you are turning over that sort of money (unless the profit element is proportionately small) it is worth paying for a decent accountant rather than a book-keeper as somebody who does this sort of thing for a living will ultimately save you money.

Don't exceed the VAT Threshold if you can help it though, as quarterly returns are a pain in the arse and unless your customer-base is VAT Registered your prices rise by 20% overnight.
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Gone (in order of ownership) - Raleigh Runabout, AP50, KH125, GP125, KH250, CBX550, Z400, CB750FII, 250LC, GS550, ZXR750H1, Guzzi Targa, GSX750F, KH250 x2, Bimota SB6R and counting...

[Hetzer]

Thank you guys, got it.
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"There's the horizon! Ride hard, ride fast and cut down all who stand in your way!"