Hello James, I'm Keith and happy to help you with your question.
Firstly I assume that you have registered your business for VAT. This is actually not necessary if turnover in a year does not exceed or approach 81K. If you do not need to register it is merely a cash flow decision as to whether registration would be advantageous.
Secondly you don't pay VAT on goods you buy for your business, you merely pay the supplier's invoice, reclaiming the VAT if any has been levied. So for your Chinese imports some you say have import tax and VAT added by HMRC on clearing Customs. The import tax is merely part of your cost of sales, the VAT, if charged, is debited to your VAT account. When you sell items on eBay and bring the sales to account the book keeping entries are Debit Cash/Bank; Credit Sales and VAT, the Sales value for posting being the total received divided by 1.2. The balance is, of course, the Output Tax at 20%. Then, when you do your quarterly VAT return on line the relevant figures will fall out of the various ledger headings used each period and the net VAT due payable to HMRC. I do hope you can see that it is actually quite a simple process, provided you maintain adequate, detailed records.
I trust I have helped you solve your problem.
Thank you for your reply, Please may i clarify a few things.
Firstly i really appreciated your help, but i'm afraid i'm quite new to this and i would appreciate Lehman term like responses, towards the end of your message i got a little confused.
May i clarify, i plan to register, but if i don't register for a VAT business because it would more favorable to not.
I buy stock ( i intend to resell ) and i pay the invoice ( VAT isn't mentioned in the invoice )
My goods are not stopped at customs so i receive the goods having not paid VAT or import tax. Where do i go from here. Will i get in trouble for not paying or getting in touch with HMRC.
I'm trying to see whether i can be a non registered, Trading through Ebay / paypal. And not be charged VAT. Then as a self employed individual i just pay my taxes at the end of the year.
If i should be paying VAT on all stock bought from china i would rather get registered then i can reclaim back certain amounts... i think ?
I'm obviously trying to make the most money but through what is safe and legal.
I look forward to your response.
In terms of registering i know its a headache and as i may not come close to the limit, i still may not register.
I do plan to give you 5 /5 from this thread.
Just to confirm - So my Chinese goods - i only pay VAT on them if they are stopped in customs. So if im not registered, i can forget about HMRC getting in touch and fining me for the VAT they could have charged on those deliveries.
If your answer is clear this will be my last message.
thank you keith