Jay Cooke

Who owns the goods at the time the goods are shipped from Germany? If you take ownership of the goods in Germany, firstly you'll need a German VAT registration as you are making a supply of goods in Germany. If the German supplier is shipping your goods, they should be using the value they sold it to you as the value on the paperwork, also the German supplier would charge you German VAT as they (the supplier) are not exporting their goods, they are exporting goods they have first sold to you and are the shipping your goods to your end customer. If you do not take ownership of the goods in Germany and the German supplier owns the goods and is "making the sale" directly to the customer and you are just an agent/middleman, they they would use the value they sold it to you for (the lower amount) and you will need to ask the supplier to instruct the freight agent to substitute their supplier invoice with your own invoice....how you get your invoice inserted into the shipment as the official commercial invoice you'll need to liaise with the German supplier and whoever their freight agent is. However, if you are asking the freight agent to swap the German commercial invoice with your own, that that brings us back to who owns the goods and it would suggest you own the goods (otherwise if it was just a sales agent commission then you'd just issue your commission invoice and not concern yourself with commercial shipping invoices as you aren't selling anything, just your services of commission). Who owns the goods at the time they arrive at the port in UAE? If the shipment has your commercial invoice it, that suggests you are the exporter of the goods, and as the goods were in Germany when they left , that suggests you must own the goods in Germany. Check back with your German supplier to see whether they intend to zero rate their sale as a direct export under their own name/carriage or whether they will charge German VAT to you and then they ship your goods as a convenience for you. Their response will then clarify as to whether they think they are selling the goods or you are.

1. Your turnover is the amount you receive from your customer, so you are correct in including the postage cost as well as your invoiced amount (turnover). 2. You calculate VAT on the amount you receive from the customer, so you should add the price of the goods plus the postage together and then you add VAT to that (you charge VAT on the postage as well as the goods). 3. The VAT rate you use is based on the VAT rate of the goods you are posting. For example, if you are posting a mobile phone cover or a part for a car, these are standard rated goods, so you treat the postage and the goods themselves as standard rated. If you are posting a book or childrens clothing, these goods are zero rated and so you zero rate the goods and the postage. https://www.gov.uk/guidance/vat-on-postage-delivery-and-direct-marketing-notice-70024#delivered-goods

HMRC routinely pass VAT collection/VAT debts onto third party debt collection agencies. Best way to fix this is to fix the issue itself. Do you have outstanding VAT returns, have you filed VAT returns but not paid all of them in full and on time? Have you ceased to trade but forgot to tell HMRC VAT team? Access your VAT gateway to see what the state of play is in terms of what HMRC think you owe and then deal directly with HMRC until the matter is resolved. Once resolved, HMRC will withdraw the 3rd party debt collector. You do not have to discuss anything with the 3rd party debt collector, they have no access to HMRC records nor in a position to discuss or negotiate your situation, so if you don't think you owe anything, if you think HMRC are wrong then deal with HMRC. If on the other hand you do owe the money and there is no dispute, then pay the debt collector. With VAT, any change of address must be made to the VAT team, if you just wrote to HMRC re. corporate tax or personal tax then they will not automatically update your address for VAT, your address for VAT purposes can often be different to your registered office (ie, the VAT address should be your trading address), this is why HMRC do not automatically update the VAT address as a business can change its registered office but not change it's trading address, or vice versa, etc.

If you are a recipient of DRC services (your subcontractor is not charging you VAT), and if you are not the end user, then you reverse charge the subcontractors invoice. The subcontractor invoice will not have any VAT charge but it should show the VAT rate and amount of VAT that you have to reverse charge. To reverse charge, you declare the VAT shown on subcontractors invoice in Box 1 of your VAT return and then also reclaim the same amount in Box 4 (so it goes in and out on same return, net effect is Nil), you also record the net value in Box 7. I assume you are a fully taxable business and can reclaim all your input tax (ie, you are not partially exempt). When you come to invoice your customer, if your customer is an end user then you charge VAT as normal. If your customer is not an end user then you invoice them without VAT (your invoice shows the VAT rate and amount of VAT that the customer has to declare). Detailed technical guidance here https://www.gov.uk/guidance/vat-reverse-charge-technical-guide

Reverse charge only applies to services in this context. Goods entering the UK from abroad will be subject to import VAT, so I would expect the sole trader to receive an invoice from the freight agent (DHL, FedEx, Royal Mail) before the goods are delivered... unless sole trader gets lucky and the goods slip through the customs net and the goods are delivered with nothing else to pay (ie, lucky chance). Reverse charge services count towards VAT registration threshold, so if you were buying in services from outside the UK, the value of those purchases are added to the sole traders turnover and that could mean if sole trader buys significant services from abroad, they could end up having to register for UK VAT as a result.

James. Has your German supplier confirmed to you whether they will be charging you German VAT or not? Suggest you get confirmation from them first as you may have a bigger issue to contend with. You have to look at this transaction in slow motion....i) USA places order with you in UK, ii) you place order with supplier in Germany, iii) Germany ships those goods to USA. Technically, you (UK) take possession of the goods in Germany. At the time the goods are shipped to USA, the German supplier no longer owns the goods, they've sold them to you (UK) and then shipped your goods to the USA. Because you take possession of those goods in Germany, i) the Germans should charge you German VAT as they are not exporting anything, they are making a domestic German sale from their warehouse in Germany to you in Germany. Then when the goods ship from Germany, as you own those goods in Germany, this triggers a German VAT registration for the UK company. As the UK entity now has a German VAT registration, the purchase does not hit your UK VAT return, not does the sale, however, both the purchase and sale would need to be declared on your German VAT return. Overseas costs such as hotels do go into Box 7, see here for HMRC's detailed guidance (section 4) link below. You cannot reclaim foreign VAT on your UK VAT return, so record the gross value in Box 7, that way come year end and working out profits to declare under corporation tax, you will have included the irrecoverable VAT elements as part of your cost of sale/expenditure. https://www.gov.uk/guidance/how-to-fill-in-and-submit-your-vat-return-vat-notice-70012#para-4

Read the HMRC guidance. You have to determine if there is a supply being made by the CIC in return for money (grant). Donations are freely given with nothing in return, donations are fairly straightforward in determining the VAT treatment, but if say a local company donates £5,000 of football kit to the CIC and the football kit as the companies branding on it, that is not a donation, that is advertising, the company is paying to have their names on the kit. Grants can be more complex, you have to read and understand the contract or agreement by which the funds are coming to you, what are you doing in return for this money? For example, if the local council give you money to advise Council tenants on rent arrears then you are supplying a debt advisory service to the Council, but if the Council gives you money to help and advise anyone who has debt problems and the Council simply wants an update as to how many people you've helped, then that is more likely outside the scope of VAT/not counting towards the VAT threshold. You may need to seek advice from an Accountant or write to HMC and seek a non-statutory clearance giving as much detail as possible, it will be difficult for HMC on this forum to give you an accurate answer as HMRC would need to understand more detail about the funding, where its from, why it is been given, who benefits, etc.

The deregistration threshold is a rolling 12 month test, same process as the registration. Look back 12 months from end of August 2023 and if your turnover is below £83,000 then you can deregister for VAT. You cannot deregister until you go below that threshold. You should therefore start looking backwards to find out when you can deregister, do not wait until the end of your financial or calendar year. If the conditions have been met, you can deregister online via your gateway https://www.gov.uk/register-for-vat/cancel-your-registration Once deregistered any sales from your deregistration date are no longer subject to VAT. When you do deregister, you may have to repay input tax previously reclaimed when you were VAT registered. In essence, any stock or asset where the combined value is more than £5,000 net, would mean you have to declare output tax on these items when you deregister. If your stock/assets is less than £5k then there is nothing to declare to HMRC. So if you bought a van or pickup, reclaimed the VAT, when you deregister chances are it'll be worth more than £5k and so output tax due, but if you bought some hand tools and a filing cabinet, these aren't going to be worth much and so nothing to declare. Follow the link above for more information.

You can only ever reclaim input tax if you hold a valid VAT invoice or VAT receipt - this rule applies to any purchase made by a VAT registered business. For example, a sale person has a coffee and sandwich during the day, they can submit an expense claim to be reimbursed their costs but unless they also supply a receipt from the shop, then the business cannot reclaim the VAT. Coming back to fuel, you do not need to be too clinical about this, as long as the employee supplies you with a receipt that is within a reasonable date range then that should be fine. As long as the receipt is dated before the business trip is sufficient and yes, the receipt might be for £100 of diesel but the employee only using £5 of diesel for their business trip, it doesn't matter, what matters is the business has a VAT receipt from petrol station dated on or before the journey. There is a reason why every petrol station you visit always asks if you want a VAT receipt. Yes, the amounts of VAT could be very small for a small business with 1-2 employees and chances are HMRC will not spot these during a VAT inspection, but chances of being spotted is not the same as following the rules, so if there are occasional missing receipts then its risky but unlikely to cause a HMRC meltdown, but if the values are higher and missing receipts are regular, then it leaves the business at risk of HMRC seeking repayment of that VAT. Guidance here, scroll down halfway https://www.gov.uk/hmrc-internal-manuals/vat-input-tax/vit55400

Ruby Place (Aberdeen) is the address used for non-established businesses who require a UK VAT registration, so the fact your VAT registration is shown as being at Ruby Place confirms that you are a non-established business. The Ruby Place address was formally known as the NETPU (Non-Established Taxable Persons Unit) and this team processed registrations for foreign businesses. If you (Director) are resident overseas, there is an argument that the UK company is not established in the UK on the basis establishment can mean physical presence such as an office or employees but also where the control of the business is and if you as Director are not UK resident, then the UK entity is under foreign/overseas control. Suspect that as your principal place of business is Portugal, this is why you have the Ruby Place address. You may be best to contact the HMRC via email vatchangeofcircs@hmrc.gov.uk or vrs.newregistrations@hmrc.gov.uk on the basis you've not filed a VAT return as yet. Explain your situation and await a reply, it might take several days/weeks so be patient. If you are UK established, you have £85k of turnover before you need to register for VAT, if you are not UK established then the threshold is Nil. Amazon see you as non-established due to your address. Amazon are responsible for collecting VAT where a trader sells on their platform and is not VAT registered, this responsibility was with effect from 01 January 2021. You should contact Amazon and explain your situation to them, a lot of Amazon is AI/automated processes and so where things are a little different, their systems don't work so well. If you've already sent them your VAT certificate (with the Aberdeen address), then you're going to have to deal with HMRC first.