Do I need to register for VAT for dropshipping

Hi, I have a registered LTD business, I am dropshipping goods. My suppliers are in china and other countries, can also be in the Uk. So I have a website, a UK customer buys an item from my website, the supplier in china sends this item to my customer's UK address. I haven't met the 85K threshold yet. Do I need to register for VAT in this case? Does it matter if the item is above or below £135? Thanks a lot.

Hi s234,
If you dropship goods and the the goods are over £135 and your customer is the importer of record for the goods and pays any import VAT /duty then this will not form part of your taxable turnover as you because you don't own the goods in the UK you will not be making a UK taxable supply here.
For goods imported below a value of £135 then this would be part of your taxable turnover as the customer can't paid the import VAT directly to a shipping company and the Chinese supplier would have no responsibility to charge the VAT as they are supplying you,not your customer.
Thank you. 

 

Hi, Regarding items below £135: I do buy my items from chinese website called aliexpress, and I do pay VAT tax for items below £135. The aliexpress website has this message: "From 11PM 31 December 2020, AliExpress is required by law to collect UK Value-Added Tax (VAT) at the applicable rate and remit to the UK tax authority when goods are sold to UK customers (i) where the goods are located outside the UK at the point of sale with a consignment value of GBP135 or less, or (ii) where the goods are in the UK at the point of sale, but sold by an overseas seller. For more information, please visit: UK government website". So for example, I have a website, i am selling an accessory for £20, the customer pays me £20, I go to Aliexpress (Chinese suppliers), the item costs £10 + £2 (VAT 20% Tax), so pay £12. The chinese supplier will ship the item to my customer in the UK. In this case, do I need to register for VAT or not? Thank you.

Hi s234,
You would still need to register for VAT if you breach the £85K registration threshold.
In this scenario there are 2 supplies being made.
The first supply is the sale of goods between the Chinese company and yourself and then the second supply would be between yourself and your customer in the UK so the second supply would also attract VAT.
Thank you. 

 

Hi, I don't have an inventory in UK. My chinese supplier ships directly to my UK customer in the dropshipping model. So if I have a website selling chairs, a UK customer comes to my website, buys a chair for £20, I buy the same chair from my chinese supplier and pay VAT (e.g. if the chair costs £10, I pay £2 as I mentioned in my previous post), and then my chinese supplier ships directly to my UK customer address. I didn't reach 85K yet, do I need to register for VAT in this case? Thank you.

Hi,
No you don't need to register for VAT if you are trading below £85k, only if you are trading above it in a rolling 12 months period.
Please see the guidance below:
Working out whether you need to register
Thank you.

Hello forum friends, I’m new to the forum I don’t know how to ask new question on the forum, so I’m writing here. Apologies if it’s wrong place I work a part time job and pay tax on it, and now I also want to start a online e-commerce clothing brand website on shopify (it’s basically dropshipping, my friend who has a shop in asia will send the clothes directly to the UK costumers who will buy from my website, because I dont have the clothes inventory space here ). i tired to search online but its really confusing some sites say u don’t need to register or pay VAT and some say u need to do from the beginning, now I’m starting with a very low budget so unfortunately the sales won’t be really much in the first year. • do I need to register my business on the gov website? By searching online I saw that there is a website u register the name and pay 50£ if I’m nt wrong? •do I need to register my self as self employed or sole trade or business partnership? •do I need to pay only income tax VAT on final sale or also pay for import goods tax (because I’m not sending the parcel my self, the parcel will be sent by my friend and manufacturer (they are in Asian country) directly to the costumer UK address). •do I need to pay VAT on kids clothes to? I saw online that the kids clothes are 0% so no VAT or I’m wrong? Please someone help me what are the steps to legally open a website, I really want to make a brand and searched online but don’t know there are so many different opinions and sites that I don’t understand what is true what is not Thank you

Hi Jawe16,
You do only need to register for VAT if your UK taxable supplies are over £90K in a rolling 12 month period.
Please see the guidance below:
3. Working out whether you need to register.
There are different entities which you could register for VAT.
If you are a single person you would register as a sole trader or if you set up a limited company you can register a limited company for VAT.
You may want to speak to an accountant regarding the benefits of setting up a limited company.
You would only set up a partnership if there is more than one person in business.
Please see the information below:
VATREG08000 - Entity to be registered: contents
Childrens clothes are generally zero rated for VAT purposes when they meet certain criteria.
Please see the guide below:
Young children's clothing and footwear (VAT Notice 714).
If you have a query about income tax please speak with our Self Assessment team as below:
Self Assessment: general enquiries
If you are drop shipping the goods to the UK from overseas then the value of the goods will determine how this is treated.
Can you confirm if the goods are above or below £135 and whether the customers are individuals or businesses.
Thank you.