QuestionBuddy

There is something that is not quite clear to me in terms of the taxation (for an LTD). If the company trades worldwide, there might be some cases when it would be paid in the currency other than GBP. There are potentially 2 scenarios then: a) If the company has an account supporting such "other" currency, let's say USD, that is received as is. b) If the company only holds a GBP account, then incoming currency gets converted using some exchange rate bank uses. In both cases there might also be a fee applied to the incoming transaction. The question is this - from the reporting perspective I believe it would be expected that the amount of money you have been paid matches what the "remote party" (one that pays you) has sent. However, from the taxation perspective that amount might not match what you have actually got - in case (b) the conversion rate and the fees apply, and in case (a) it also might be some fee. So what exactly should be considered the amount that is taxable and should be paid to HMRC? And how the discrepancy between the receipt and amount actually received is supposed to be handled? To simplify, let's say someone pays you 10 USD (and the receipt produced states exactly that), In case (a) you are getting 9,80 USD because the bank takes the transaction fee. Or in case (b) the bank converts that to 7.6 GBP and then also takes 10p for the processing, leaving you with 7.5 GBP. What are you supposed to report to HMRC at the end of the day as the taxable amount in both cases (and also in case a you would still have to convert to GBP presumably)? Just want to make sure the nuances of reporting and paperwork are clear when it comes to corporation taxes. Thanks.

Dear HMRC admins, I had a business bank account some years ago, when opened a Limited Company in the UK. I'm the only director of that company and I have my personal account with the UK bank (with about 1 or 2 transactions a year). Since the company was dormant for a long time, I eventually closed the business account. Now I was going to start trading for the first time, so before registering with HMRC for the tax, I went to check if I need a business account. The information seems controversial - for example HSBC on its "business banking pages" insists that you "must" have a business bank account for an LTD, and you "can't use personal account". Some other sources, like "businessexpert" site (https://www.businessexpert.co.uk/business-banking/does-a-limited-company-need-a-business-bank-account/), go as far as saying that using personal account would NOT be in compliance with Companies Act 2006 and it is "not legal" to do so. On the other hand, some sources, including this very forum, appear to say that you do not need a business bank account by law (and don't even need an UK bank account). I would greatly appreciate if someone could explain whether business bank account is actually needed and whether personal bank account could be used instead? Thanks.

Hi HMRC Admin 10, Sure, one of the examples would be Redbubble - artists can upload their design, and Redbubble itself (headquartered in Australia) can then sell items with such design on them worldwide. They have fullfillers (doing the actual printing and shipment) in the US, Europe and Australia (multiple locations), as outlined in their help pages covering where does my order ship from. The customers could be anywhere. Redbubble claims to take care of taxes and VAT, as outlined at their help pages on how is my payment calculated [web links removed]
 

Thanks, Jay and HMRC Admin 19. Understood regarding the person in this context being effectively the company. On the topic of POD, there are effectively 2 models: - Popular one like offered by Printify, where you are effectively buying the item from Printify and reselling it to the customer, in which case I believe the burden of accounting for VAT falls onto you as the actual seller. - Something like offered by Redbubble (and I believe Amazon KDP), where the item is actually sold by POD service and you are only getting a cut. My question is about that second option. For example, as document at [Link removed]"Redbubble will calculate, collect and remit VAT to the relevant EU tax authorities". That looks rather straightforward, and I believe the VAT registration is not required in such case (but would be great if some HMRC admin could confirm). With KDP the discussions also point to that [link / details removed]

After reading https://www.gov.uk/government/publications/vat-notice-7001-should-i-be-registered-for-vat/vat-notice-7001-should-i-be-registered-for-vat, I understand that NETP (such as someone who is currently a resident of an EU country, even though the UK citizen) would have to be registered for VAT regardless of the revenue threshold IF "you make any taxable supplies in the UK". However, the document at https://www.gov.uk/hmrc-internal-manuals/vat-registration-manual/vatreg37150 states that "Non-established taxable person (NETP) is used to describe a person who is liable to be registered for VAT under Schedule 1A to the VAT ACT 1994." Since NETP is specifically pointing to a "person", it is a bit confusing whether the UK Limited Company (director, no employees), would also have to register for VAT regardless of the thresholds (if "taxable supplies in the UK" are made). Could someone on the HMRC team please elaborate on that and point to the documents clearly outlining the LTD scenario? Additionally, do I understand this correctly, that the key here is actually selling "taxable supplies in the UK", and for the business such as Print On Demand for example, where the model of the vendor company is making actual sales (say Amazon KDP, Lulu or Redbubble), the registration for VAT would not be needed? Thanks.

This is a very interesting thread, and I hope someone could clarify something in the following part of it: --- HMRC can accept a company which is incorporated in the UK as being established in the UK, as long as the company can receive business type supplies at its registered office (what HMRC call a principal place of business), if it is a virtual office or Accountants office then it is unlikely to meet the HMRC view of UK establishment as I doubt a virtual office can receive supplies on behalf of the business. --- Could someone please provide the precise definition of "supplies" in this case? For instance, if the company has a registered office in the UK provided by one of many formation companies, and it can receive official correspondence and other letters at that office (and the company deals in "print on demand", so no real goods are ever stored by the company itself), would it still be treated by HMRC as NETP if the sole director moved to EU? Thanks.