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The VAT man cometh (but not just yet)

Elizabeth Ward

At the moment I am too small to need to register for VAT.  That has advantages and disadvantages.  The advantage is that I can supply goods a little cheaper than larger retailers (which doesn't compensate for the huge economies of scale the very large ones have, but yes it does help).  The disadvantage is that I cannot offer AIPS.  I expect this to change in November.

A couple of quick explanations about VAT which you might not be aware of (don't feel too bad if you weren't, I have known LEA purchasing departments to get this wrong!).  1. The saving if VAT is deducted is not 20% but 16.7% (you ADD 20% to get price with VAT, to get the price without VAT you divide by 1.2) and 2. The 20% is on the ADDED value (the hint is in the name!) .  If a VAT registered shop buys from a VAT registered supplier (wholesaler etc.) the shop pays the price excluding VAT.  I have to pay the price including VAT.  When I buy from Gliga or Mollenhauer, I have to pay the VAT.  Previously when Elida Trading was turning over more, we did not have to pay VAT on these because we were registered for VAT.  So the saving isn't as much as you might think it is (it's nearer 6% than 20%!)

Now, if a non VAT registered shop buys from a non VAT registered supplier (within the EEA, while we still have it!) no-one pays any VAT.  Right now, until I register for VAT, anything that comes from a very small EU supplier (it will be clear which those are, the makers are not named) doesn't have any VAT on at all from anywhere.  Once I am VAT registered, these will have 20% on them one way or the other, because if the supplier is not VAT registered I will not be able to claim VAT back, and if he is VAT registered by then, he will have to pay it and it will be added to his prices.

To beat the VAT man on these items, then, order before either the small supplier or I register for VAT!

[Do please note that this does not apply to items from the USA - import from there and you pay VAT and customs on the full price including shipping]



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