Jay Cooke

The threshold calculation is a rolling 12 month calculation, that is, you total the turnover from end of February 2024 to end of February 2023 and if the total is over £85k then you register for VAT. The VAT threshold has increased to £90k from 01st April, but you need to look at your total sales from end of March 2024 to end of March 2023 and if you are over £85k then you still need to register for VAT. If you have submitted a compulsory VAT registration in February because you were over the threshold in February, the fact that HMRC do not accept your ID documents does not change the fact you went over the threshold in February and applied for VAT in February.

I have had several clients who have had delayed repayments and on their gateway it states "we have sent a letter.... and no letter has ever been received. The fact that this has happened to several clients suggests that this is an IT issue/communication issue and not a one-off situation just affecting you. I have flagged this with HMRC on the agent forum but it seems no action was taken. My resolution was to call the VAT helpline and persist with waiting 45 minutes on hold until you get to speak to someone and then once you have someone to speak with, they can then resolve the issue. It seems there is a disconnect between the VAT return being flagged for review and someone actually reviewing it, so making a call to give it a nudge appears the only solution. Thank heavens that HMRC did not turn off their helpline as they had planned at start of April, else you'd have no way to get your refund or enquiry dealt with.

If the review concluded that the original decision was wrong (flawed methodology), then potentially i) no further action from HMRC and you receive your refund, or ii) the reviewing Officer may seek to apply a new methodology to calculate the VAT that is due to you which may be less than you claimed because of whatever new methodology the reviewing Officer may have applied.   Did you not receive a letter from HMRC confirming what their conclusion was? If not, then you need to contact HMRC and request a copy of their decision as it will set out what the outcome is.

Read this guidance here - https://www.gov.uk/guidance/refunds-of-uk-vat-for-non-uk-businesses-or-eu-vat-for-uk-businesses UK operates a scheme similar to the EU 8th/13th Directives, which allow non-resident VAT registered businesses to reclaim VAT. Section 2.9.1 and 2.9.4 explains how to make a claim, a paper claim may be simplest. The guidance details what you must supply to make a valid claim.

It's unusual for the technical team (reporting problem with a page) not to get reply to you within a couple of days. One tip I would suggest is it may be the company name or address that is the issue. You must use the information as per Companies House, so if Companies House shows your business as "Ltd" or "Limited" you must use the exact same, for the address it should be the address/postcode as per Companies House too.

As you are non-UK resident, the VAT registration threshold is Nil, so the first sale you make triggers VAT registration, whereas the UK supplier can trade up to £85,000 before they need to register for VAT because they are, presumably, UK resident. So you still need to register for VAT because you are making a "sale" to eBay first. Zero rated sales are still seen as being subject to VAT even though the VAT is Nil, so zero rated sales count towards the VAT registration threshold and for you, being non-resident, the threshold is Nil. Yes, you would then submit VAT returns with no output tax (sales VAT) due to HMRC and no input tax (purchase VAT) either. In theory, you could register for VAT and at the same time, ask HMRC for "exception from registration", if HMRC agree they will write back to you confirming this, but that may not satisfy the online marketplace as that exception is conditional on you not making any standard rated sales so the marketplace may accept it initially but then may revisit in the future and request further proof on a regular basis.

HMRC do not issue "VAT exemption letters", and yet eBay, Amazon and other online marketplaces continue to ask traders to provide a VAT exemption certificate, they ask for something that does not exist. HMRC have supplied the link in their post above, you need to read it thoroughly and specifically this section : "UK VAT will be due at the time the sale of goods takes place as it is now, but the significant change here is that the online marketplace will be deemed to be the supplier and so liable to account for the VAT on sales facilitated through its marketplace. This means that for VAT purposes the seller, operating through an online marketplace, will no longer be making a supply to consumers in the UK." "At the point the goods are sold to the customer, the overseas seller will be deemed to make a zero-rated supply of the goods to the online marketplace. This is so that the overseas seller will be eligible to register for VAT in the UK and reclaim any import VAT it has incurred in the course of importing the goods, subject to the normal rules for VAT deduction. The overseas seller should show the value of its supplies in box 6 of its VAT return (value of sales) but will not be responsible for declaring VAT on those deemed sales made through the online marketplace." For under £135 sales, eBay collects and pays the VAT to HMRC but the goods still belong to you, there is a "deemed sale" from you to eBay first (zero rated) and then eBay facilitates the collection of VAT from customer and also the payment of VAT to HMRC...that deemed sale from you to eBay is zero rated and as you are making a zero rated sale to eBay, triggers a UK VAT registration as you are not UK resident and cannot avail of the £85k VAT registration threshold. Speak to your Accountant, as the rules on £135/€150 are the same across the EU and not just unique to the UK and you'll not be the only business selling on a UK marketplace.

HMRC Admin - The poster has left an email address in their post, can it be removed please? Cornel - You need to look at sales and purchases separate rather than try and net them off in your head. Sales (as your example). You invoice your client £1,000 + £200 VAT, your customer pays you £1,200 and so you keep £1,000 which is your net and the £200 you pay to HMRC. Purchases. Subcontractor 1 charges you £500 + £100 VAT (£600 total). Subcontractor 2 charges you £600 (no VAT). Subcontractor 2 is more expensive than Subcontractor 1. Subcontractor 1 only wants £500 for their services, plus £100 for VAT (and Subcontractor 1 will pay £100 over to HMRC). At the same time, you can reclaim the £100 VAT charged by Subcontractor 1 from HMRC....in effect the VAT flows through both you and the subcontractor and neither you nor subcontractor are out of pocket for VAT. Subcontractor 2 is charging £600 no VAT, so they are £100 more expensive than Subcontractor 1 and there is no VAT here for you to reclaim, Subcontractor 2 is expensive assuming they are offering the same service/same mileage/delivery, etc. So you have income of £1,000 and costs of £500 (Sub1) and £600 (sub2) = £1,100 and this is nothing to do with VAT, this means either your costs are too high or you are not pricing your sales to make a profit. In your example you made a £100 loss and even if you used Subcontractor 1 for both jobs you would only break even. You don't owe £100 to HMRC, that VAT (Sub1) was paid by you to Sub1 and Sub1 pays this to HMRC and you then reclaim the £100 from HMRC so the cost to you for Sub1 is just £500. The £100 loss you are seeing is because Sub2 costs £600 and is more expensive than Sub1. basically, your costs are too high, nothing to do with VAT. With regard your client who has not paid you, if you are operating ash accounting then you only declare output tax (sales VAT) to HMRC when you get paid, if your client goes bankrupt then you obviously do not get paid the £1,000 (using your example) but you don't pay £200 to HMRC either as you've not yet been paid. Cash Accounting guidance https://www.gov.uk/vat-cash-accounting-scheme