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How does VAT work when importing goods from China?Business Community Home > Finance and Tax Forum > VAT Forum |
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| Original Message Added : 19 Aug 2012 i am new to this so please forgive me if i am posting this in the wrong place. I have just won a contract to handle the shipping, import and delivery for a chinese company to the UK. The Chinese company will consolidate all of their goods they sell online to the UK in 1 container and consign the container to my company which i will then import, bring to my warehouse, split the container and deliver the cargo to individual customers houses. My question is how will the import VAT work, I can pay this at point of entry on their behalf using my VAT number but do I have to create a purchase invoice to my company for the cargo as if I have purchased the goods from china and reselling or can I simply invoice the china company the VAT I paid on their behalf as well as the delivery charges. Of course the Chinese company will not be looking to reclaim this VAT. My company is only a delivery / distribution company, we do not buy and sell anything. For example my cost £600 import VAT paid at entry to UK using my companies VAT number. Courier charges £800 plus £180 VAT @20% I would then invoice the china customer £600 import VAT Courier Charges £1000 plus £200 VAT @20% (£200 profit for our company) Am I right in thinking my VAT return would then be £20 to pay? As £600 already paid at point of entry under my VAT number? Oh am I way off the mark here and this is not allowed to import and deliver on behalf of foreign companies? Any advice is greatly appreciated |
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| Reply : 19 Aug 2012 The Chinese company needs to register for VAT in the UK and appoint a VAT representative who can file VAT returns on behalf of the chinese company. The Chinese Company can then apply for a deferment of its VAT and duty. You will not then have to pay the £600import VAT. Regards Chris Whiteley 07790-816592 Info@Clientspal.com Offices in most UK cities |
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| Reply : 19 Aug 2012 thanks for the reply, I don't mind paying the VAT on their behalf i was just wondering is that legal as the goods do not belong to me? Can i pay the VAT for them against my vat number and then invoice them from my company for the VAT owed? The chinese company would like me to handle the whole process for them door to door including customs clearance, they are not interested in registering in the UK. At present they use DHL and DHL bill all customs VAT and duty back to the shippers account, but now they are focusing on furniture and that has to be sent via container due to the size. i just want to check that if i proceed this way i will not be breaking any UK laws? kind regards Ricky |
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| Reply : 19 Aug 2012 If you supply a C79 certificate you will be able to invoice any Import VAT paid. If the Chinese company is over the VAT registration threshold and they do not have a permanent establishment in the UK they will need to register as a NETP in the UK. They would normally be advised to appoint an agent to fulfill their VAT obligations. In any event the Chinese company will need to apply for a EOIR number to be able to deal with Customs and Excise. If you have any further queries please feel free to call me. Regards Chris Whiteley 07790-816592 Info@Clientspal.com Offices in Most UK cities Will visit |
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| Reply : 21 Aug 2012 Sorry I was in a bad reception area. Feel free if you wish to call back. Regards Chris Whiteley |
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| Reply : 23 Aug 2012 If you have any questions please do not hesitate to contact us Harry Lee hlee@scleeaccountant.com 02088962978 /07910237546 |
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| Reply : 6 Sep 2012 On import/export outside EC different rules are applying regarding to VAT. Your service is for example exempt from VAT because it isn't part of UK. And the VAT on the goods has also nothing to do with you. That is a VAT disbursement. This way you shift that towards your Chinese client. This not standard practise and I would recommend to get a professional in. Keep in mind that not all Accountants are specialist in this field. Yours truly, Ahsan Pijlman Business 4 Accountant Ltd |
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| Reply : 15 Dec 2012 Did you manage to get this sorted out? Many thanks Toni |
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