Jay Cooke

The customer pays the VAT to you when the customer buys a drink or snack. If you cannot afford to pay HMRC the VAT (that you collected from the customer), then this means you have spent the VAT on something else. Most business will ringfence the VAT they have collected from their customers so that there is no temptation to spend the VAT on something else, the VAT belongs to HMRC. Whether you charge £1.20 for a coffee or £2.40 the price includes the VAT element that the customer pays to you and you pay to HMRC. VAT should just pass through the business. Under the flat rate scheme, you charge the customer 20% VAT but pay over to HMRC a flat rate of 12.5%. For example, you sell a coffee for £1.00 + 20p VAT (total £1.20), the £1 is your sale/turnover and the 20p belongs to HMRC but under the flat rate scheme, you would pay over 12.5% of the gross sale, the gross sale is £1.20 so £1.20 x 12.5% = 15p. In this example you receive £1.20 from the customer, you pay over 15p VAT to HMRC and you keep the difference (5p) plus the £1.00 (£1.05 in total). Q1. You will not be able to deregister whilst you have outstanding VAT return/VAT liabilities owed to HMRC else, you can only deregister when your rolling 12 month turnover goes below £83,000 or if the business ceases to trade. If/when you cease to trade or deregister, you may also have to pay output tax on the value of any stock, assets or goods on hand at time of deregistration. As a sole trader unable to pay their VAT liability, speak to HMRC time to pay/debt management team to see if you can set up a payment plan. https://www.gov.uk/difficulties-paying-hmrc/pay-in-instalments Once you are on the FRS, you can remain on it until your turnover exceeds £230,000 see section 11 here https://www.gov.uk/guidance/flat-rate-scheme-for-small-businesses-vat-notice-733--2#leaving-the-scheme and also note that the £230k test is an annual test done on your anniversary of joining the flat rate scheme (same link section 12.3) and also note that once you leave the FRS scheme, you cannot rejoin it for 12 months.

HMRC are correct and I think you may be misunderstanding the transaction flow when an overseas supplier sells via Amazon/online marketplace.There are two sales : 1. First you (as supplier) sell the goods to Amazon/Online MarketPlace. That sale is zero rated (You to Amazon) as per "When the goods are sold to the customer, the overseas seller will be considered to have made a zero-rated supply of the goods to the online marketplace, known as a ‘deemed supply". This is stage one. 2. Second, Amazon makes the sale of those same goods to the end customer, that sale is whatever the VAT rate is and Amazon accounts for the VAT on that sale (Amazon to customer). The guidance states "Any sales a seller makes through an online marketplace, where the online marketplace is liable to account for the VAT, will not be included in the Flat Rate Scheme calculation from 1 January 2021." This is stating that the sales that are made by Amazon/online marketplace are not your sales, so you do not need to include the value of the sales Amazon makes under your flat rate scheme calculation. But you still make a sale of the goods to Amazon first and it is that sale, zero rated, which is subject to VAT under the flat rate scheme. It is unwise to operate flat rate scheme because i) you have to declare VAT on the zero rated sale you make to Amazon and ii) you cannot reclaim import VAT when the goods are imported into the UK. When goods enter the UK they will be subject to import VAT, your freight agent might default to using Postponed Import VAT Accounting (PIVA) and you may not even be aware that import VAT has been postponed/not paid by freight agent when the goods cross the UK border. You may discover that you have import VAT that you are unaware that you have to declare on your flat rate VAT return (see link below, section 6.5) https://www.gov.uk/guidance/flat-rate-scheme-for-small-businesses-vat-notice-733--2 To answer your question, you do not need to include the transactions "TAX-COLLECTION-RESPONSBILITY_MARKETPLACE" in your FRS calculations as those sales are made by Amazon/Marketplace, but you do need to include the value of the deemed supply from you to Amazon in your FRS calculation and pay whatever your flat rate percentage is.....this is bad, you are declaring a flat rate percentage of VAT to HMRC on the sales you make to Amazon, those sales are zero rated so you are not collecting any VAT from Amazon but paying over a % to HMRC (ie, you zero rate sale to Amazon for £100/no VAT, Amazon pay you £100/no VAT, you declare say 6% of the gross, so you are paying £6 VAT to HMRC out of the £100 you received from Amazon. You may need to consider if the flat rate scheme is the right scheme for you, This is

When you say you tried deregistering using the online form, is that the form you access via government gateway/VAT portal or the generic deregistration form you can fill in and email to vrs.newregistrations team? One route might be to setup a gateway for the VAT number you want to deregister and once you access your government gateway there is a menu option to cancel your registration. Cancel it through the gateway might be better than sending an email form. The other problem you might be having is that you cannot usually deregister when you have outstanding VAT returns and so you might be being rejected from cancelling because you've outstanding returns, in theory, only your duplicate VAT number should have outstanding returns, your other VAT number is your legitimate number and so you should be filing VAT returns as normal. There is also a number for the de-registrations team, although like most HMRC helplines, they are often engaged/busy and so you need to keep calling until you get through to someone, the de-registrations team number is 0300 322 7871. There was a small batch of VAT registrations that got duplicated back in early 2022, as I had a couple of these myself and so my clients filed VAT returns on time and paid their VAT liabilities on time using one of the VAT numbers and they deregistered the other VAT number but that process did take a couple months but back in 2022 we were recovering from Covid as a Country and so there was a backlog at HMRC. My clients used only one VAT number on their invoices and acted like the duplicate VAT number never existed, so make sure your invoices shows one VAT number only, file your returns using that one VAT number and in time you will get the duplicate number cancelled and that will then leave you in the position like the duplicate never existed you will just end up with your single VAT number, filing returns, etc.

I agree with services incurred in the UK that are then recharged to EU subs would likely be outside the scope of VAT (place of supply of most services is where the customer is). But for goods, be careful. You can only zero rate goods if they are exported/leave the Country. So if UK company buys some laptops/goods in the UK and ships them to EU/rest of world subs, then they can be zero rated (but potentially subject to import duty at destination), but if the laptops/goods remain in the UK and used either by UK staff or EU staff based in the UK, then as the laptops aren't leaving the UK, you'd have to sell the laptops to your EU subs plus UK VAT as you do not have proof of export.

You need to read this HMRC Notice https://www.gov.uk/guidance/opting-to-tax-land-and-buildings-notice-742a You cannot charge VAT on rent relating to a commercial property unless you have first notified HMRC in writing (via email). This process is called "opting to tax", this is because commercial rent is not a VATable supply, it is an exempt supply, but you as the property owner have the choice to "opt" to tax the property, whereby you notify your intention to charge VAT on rent and your rent is then standard rated. The right to reclaim VAT is always on the basis the costs you incur (property purchase) are connected to the making of a taxable /VATable supply (the rent is your supply, it is not taxable unless you opt, so without opting, no right to reclaim VAT), so to answer your query, you cannot reclaim any input tax (the £20,000) unless you first opt to tax/notify HMRC. You should read all of the Notice and then speak to your accountant if you have one. Once you have notified your option to tax, it is irrevocable for 20 years, this means all future rents or any future sale will be subject to VAT, even if you try to deregister for VAT within next 20 years, there may likely be an output tax liability due on the market value of the property which you'll have to pay before deregistering (unless you ell the property plus VAT or it meets the sale conditions to be a ToGC), so opting to tax is not something to take lightly or without advice or at least thinking through the numbers first.. If you try and reclaim the £20,000 VAT on your next VAT return, this will likely attract HMRC's attention (HMRC often monitor land registry transactions plus the £20k might be a higher figure than normal for your business and such a spike will trigger HMRC to query the return) and when HMRC enquire as to why the refund is so high, you will tell them you bought a property to rent out, HMRC will then ask for your option to tax notification, you will not have that and HMRC will deny you the refund and potentially issue penalties for trying to reclaim VAT without an option to tax in place. In summary, you can reclaim the VAT if you opt to tax, but ensure you understand all the implications of opting to tax. If you don't opt to tax, you cannot reclaim the input tax on the property purchase.

The courier should always be given clear instructions as to who the importer is, what the import terms are, etc. if the seller arranges the shipping then make sure the supplier knows your GB EORI and want to use PVA. if you are arranging the shipping then you can tell the freight agent yourself. Some freight agents will default to postponed VAT if they have been supplied with the importers GB EORI number, they'll just assume you want to postpone the VAT. Some other freight agents will default to paying the import VAT and recharging it back to you unless they have been specifically instructed to postpone the VAT.