How do I find you if you need to register for VAT if you are an eBay seller
We often receive qustions like these from online traders :
· Most of our sales are to non –EU customers, should we register for VAT ?
· My sales are mainly to EU citizens should i charge UK VAT ?
· I understand VAT in UK is 20% yet in other countries VAT is as low as 12%. Can i register VAT in that country and avoid chardign VAT in UK ?
· Im selling one off items online eg on eBay –should i register for VAT ?
Traders are faced wtih the decision of whether to register for VAT (and perhaps lose the compettive edge/ and or reduce prices) or reducing sales to below the threshold. High turnover doesnt always translate to high profits !!. Thereore finding out if you need to register for VAT is key to your businesss.
If your VATable turnover (total sales) in the previous 12 months exceeds the compulsory registration threshold in that country (currently £77,000 in UK), then yes – you must register. Unfortunately sale s to Non-EU countries count towards the turnover threshold above, though the sales are considered zero rated. However if your majority of sales are to non-EU countries, HMRC tend to be ok with you not registering for VAT (thats thier prerogative) Failure to register can result in fines. It’s important to note that this is on a rolling 12 months basis (ie, the last 12 months from any given point), not based on turnover in a calendar year. If you havent exceeded the threshold for compulsory registration you can still register voluntarily if it makes sense for you to do so.
You normally don’t have to worry about tax if you sell unwanted Christmas presents, your old clothes or the family car. These are the sort of one-off transactions which don’t attract tax or VAT. However if you have bought 1000 cds and selling them on eBay as individual cds, then you are considered to be trading.
If you are selling to customers in the EU who arent VAT registered, and you are responsible for delivery of the goods, you may have to register for VAT in your customer’s country if you exceed thier VAT threshold.
Some online and eBay traders, in a wilful attempt to avoid having to be bound by the terms and restrictions of VAT, will try to artificially reduce the value of their turnover by creating another, similar business entity which is comparable to the one that they already possess, and then proceed to conduct sales through the newly founded business entity.If HMRC has reasonable grounds to suspect that a business owner has acted in the aforementioned manner then they will adopt a fairly simplistic approach to resolve the situation: they will simply aggregate the full value of all of the various branches of the main business entity and then treat that as being the turnover value for the main business entity.