Can contractors using VAT Flat Rate Scheme gain 20% discount by importing?

[ujjain]

I've just signed my first contract and I'm planning to get some electronics soon. If you use the VAT Flat Rate Scheme, you will not get the 20% VAT back, unless your expenditure is over £2000.

European countries can send other companies invoices without VAT. Doesn't that mean you can effectively gain a 20% discount by buying from other EU countries?

I asked my accountant, but he didn't know about VAT in other countries.

[Batcher]

I've just signed my first contract and I'm planning to get some electronics soon. If you use the VAT Flat Rate Scheme, you will not get the 20% VAT back, unless your expenditure is over £2000.

European countries can send other companies invoices without VAT. Doesn't that mean you can effectively gain a 20% discount by buying from other EU countries?

I asked my accountant, but he didn't know about VAT in other countries.

Time to change your accountant then.

[PerfectStorm]

I've noticed that Amazon lets you input your VAT number and I think exclude VAT on purchases, being as they are, a foreign tax dodge.

[TheCyclingProgrammer]

No, this does not work unless you intend to lie on your VAT return.

Imported goods are zero rated by the supplier but you, the business customer, have to pay acquisition VAT on these goods - in effect you charge yourself VAT on your VAT return. Acquisition VAT is not reclaimable on the FRS.

It is worth noting that this DOES work for services however. If you give your VAT number to a supplier of services they should not charge you VAT (outside the scope of VAT at their end). You then have to deal with this using the reverse charge mechanism - in effect you handle it as if you both supplied and received the service.

The anomaly is, unlike acquisition VAT on imports, the reverse charge is dealt with outside the FRS entirely - you enter the same amount as both input and output VAT on your return, thus cancelling eachother out.

You can read about VAT on imported goods and services here, which explains both of the above in more detail:

https://www.gov.uk/vat-imports-acqui...es-from-abroad

HMRC have recently updated their VAT notice for the FRS and have clarified how to apply import VAT and the reverse charge:

https://www.gov.uk/government/public...our-vat-return

Notably the explanation for box 4:

You should also use this box to record transactions that are subject to the reverse charge - cancelling out the figure recorded in box 1.

As with goods and services you buy from suppliers in the UK, you must not normally claim VAT on any acquisitions of goods and related services from other EC Member States. However, you can normally claim for any single purchase of capital expenditure goods of £2,000 or more value, including VAT. For more details, see paragraph 15.2.

Note that "services" in the above bit refers to services directly related to the supply of goods.

[TheCyclingProgrammer]

Time to change your accountant then.

Oh, and this too.

[northernladuk]

Time to change your accountant then.

Absolutely this. What kind of response is 'I don't know' FFS... Tell him to at least bloody find out! You are paying him to run a business not pick and chose what he fancies doing!!

Move.. and fast!

[tractor]

...

I've just signed my first contract and I'm planning to get some electronics soon. If you use the VAT Flat Rate Scheme, you will not get the 20% VAT back, unless your expenditure is over £2000.

European countries can send other companies invoices without VAT. Doesn't that mean you can effectively gain a 20% discount by buying from other EU countries?

I asked my accountant, but he didn't know about VAT in other countries.

Why do you think Chinese imported electronics are so cheap on Amazon? About 20% cheap. Because they put 'Gift' or 'Sample' all over the packaging in the hope it will get through customs. If you get caught, you pay the VAT and there is nowhere to hide.

People always looking for these scams annoy me. Then people wonder why we get a bad name.

To the OP, why do you think that you should have your cake and eat it? What you are proposing is illegal.

[stek]

My £1700 '93 Rickenbacker guitar got through customs from USA with no duty or vat, sweet!

Saved 20-odd%....

[tractor]

...

My £1700 '93 Rickenbacker guitar got through customs from USA with no duty or vat, sweet!

Saved 20-odd%....

Yes, but did you claim it on expenses?

Also, you should consider getting a spare in case the other one gets a puncture :P

[NickNick]

My £1700 '93 Rickenbacker guitar got through customs from USA with no duty or vat, sweet!

Saved 20-odd%....

And yet a t-shirt I bought the other day got caught and I had to pay. Where is the justice? :O)