This is a minefield and no one wants to take responsibility for finding and providing answers.
I asked my accountant for some advice on the new VAT implications of importing goods from Georgia. They didn’t know but told me that they had experts they could go to when faced with such tricky questions. They suggested that I formulate my questions, commit them to an email and they would pass them on.
Imagine my surprise when, presented with real questions about VAT rules on imports to the UK from Georgia, the advice was to approach the local Chamber of Commerce as they had a special expertise in … exports!
I kid you not.
I mention this as a warning: whatever you might be told, do your own research.
If it goes wrong, it’s you on the hook, not them.
An accountant annecdote
Several years ago, I was chatting with the accountant about how things were going and what the future looked like. During the conversation, we talked about the potential impact of IR35 and at some point, VAT was mentioned. I have to say here that I wasn’t particularly interested in VAT as its relationship with what I was doing was prescriptive, with very little room for manoeuvre.
We concluded our chat and off I went.
Imagine my surprise when the quarterly bill landed on the doormat, with a charge for an hour of VAT consultation.
Just saying!
The accountant was happy then to charge me for advice that I didn’t need but now is unwilling to provide any guidance on future VAT implications.
What is doubly concerning is that the accountant will be responsible for ensuring that any VAT returns I complete in the future are completed correctly.
This is a minefield and no one wants to take responsibility for finding and providing answers.
Dropshipping and VAT in the UK
There is no one-size fits all solution.
Have a look at the sort of questions that were being asked … check out the Payment Monkey Questions.
There is a lot to consider and there are many ways to find yourself in trouble. It’s almost as if the UK government doesn’t want its citizens trading internationally!
Dropshipping has a potential for causing confusion, becauese the nature of the business model necesarily seperates the supplier from the retailer.
Dropshipping using a UK-based supplier should be straightforward, any taxation anomolies in relation to the products provided for sale to consumers should have been resolved. As a dropshipper, we are responsible for adding the government’s 20% to everything (just about) that we sell and for using the quartely VAT return to reclaim the VAT we have paid to the suppliers.
UK dropshippers using UK suppliers to supply goods to UK consumers do not need to be concerned about import duty, which is not the case for goods coming in from overseas.
VAT, Dropshippers and Dropshipping Situations
The following taxtion situations were identified previously in the post: What’s VAT got to do with DropShipping?
- UK Suppliers and UK Customers
- UK Suppliers to EU Customers
- UK Suppliers to “Rest of the World” customers
- EU Suppliers to UK Customers
- EU Suppliers to EU Customers
- EU Suppliers to the Rest of the World
- Rest of the World Suppliers to UK Customers
- Rest of the World Suppliers to EU Customers
- Rest of the World Suppliers to Rest of the World Customers
These were refined to match the immediate requirements as outlined in the Payment Monkey Questions.
There are probably around 195-196 sovereign nations around the world, depending on who is doing the counting. It’s possible that each one, should you make the decision to engage in trade, will have its own set of rules. What follows is a set of rules and requirements that are focused on immediate requirements.
- selling UK manufactured products in the UK
- selling UK manufactured products in the EU
- selling UK manufactured products in the RoW (Rest of the World)
- selling EU manufactured products in the UK
- selling EU manufactured products in the EU
- selling EU manufactured products in the RoW
- selling products manufactured in Georgia (not the US) to the UK
- selling products manufactured in Georgia to the EU
- selling products manufactured in Georgia to the RoW
UK Suppliers and UK Customers
Suppliers in the UK shipping goods to customers in the UK on the instruction of a UK VAT-registered business (turnover >£85k)
UK Suppliers to EU Customers
Suppliers in the UK shipping goods to customers in the EU on the instructions of a UK VAT-registered business
UK Suppliers to “Rest of the World” customers
Suppliers from somewhere outside of the EU or the UK shipping goods to customers in the UK on the instruction of a UK VAT-registered business
EU Suppliers to UK Customers
Suppliers in the EU shipping goods to customers in the UK on the instruction of a UK VAT-registered business
EU Suppliers to EU Customers
Suppliers in the EU shipping goods to customers in the EU on the instruction of a UK VAT-registered business
EU Suppliers to the Rest of the World
Suppliers in the EU shipping goods to customers outside the EU and the UK on the instruction of a UK VAT-registered business
Rest of the World Suppliers to UK Customers
Suppliers from outside the EU and outside the UK shipping goods to customers in the UK on the instruction of a UK VAT-registered business
Rest of the World Suppliers to EU Customers
Suppliers from outside the EU and outside the UK shipping goods to customers in the EU on the instruction of a UK VAT-registered business
Rest of the World Suppliers to Rest of the World Customers
Suppliers from outside the EU and outside the UK shipping goods to customers oustide the EU and outside the UK on the instruction of a UK VAT-registered business
