RE: Does dropshipping outside the UK count towards the VAT threshold?

I have goods for sale on ebay.com (ie the US Ebay site) For sales on this site, I fulfill the orders from US suppliers who send direct to the US customers. Do these sales count towards the VAT threshold or not? I think not, because they are "out of scope" Ebay say they do, because I've stated on the eBay listings that the "item location" is my address in the UK since I dont know in advance which US supplier I am going to use. So do these sales count towards the VAT threshold or not?

Hi,

If the goods are never in the UK then they would be outside the scope of UK VAT and would not count towards your VAT turnover.

Thank you

EBay say they want either a VAT number or to see a letter of exemption from HMRC. How could I get a letter of exemption? Excluding the US sales, we are below the threshold, and are not VAT registered.

Hi,
If the goods never enter the UK then all of your supplies are Outside the Scope of VAT and hence there would be no requirement to register for VAT.
You would therefore not be able to provide a VAT number to ebay.
HMRC would not be able to provide you any sort of confirmation that you are exempt from VAT registration in the UK unfortunately.
Thank you.

As soon as turnover (including US sales) for the prior 12m falls below £90K, would I be able to register for VAT in order to release the ebay hold? Presumably, yes, but would I be able to then deregister straight afterwards?

Hi,
There is only a requirement to register for VAT in the UK if you make taxable supplie sin the UK over the threshold of £90k.
However you can register for VAT voluntarily if you make supplies which are Outside The Scope of UK VAT but which would be taxable if made in the UK.
Please see the guidance below, specifically section 2.9:
Who should register for VAT (VAT Notice 700/1)
If you do not meet the critera to register for VAT on this basis then you will not be able to register for VAT.
If you are able to register for VAT voluntarily then you can deregister from VAT at any time.
Thank you.