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bigduckontax
bigduckontax, Accountant
Category: Tax
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Hi Ive been asked to work on behalf of a company in Tokyo.

Customer Question

Hi Ive been asked to work on behalf of a company in Tokyo. I am based here in the UK and will source british made goods (men's clothing) to be exported directly from the manufacturer to Japan.
However to simply and reduce bank charges they have asked that I pay all invoices directly.
i.e. the manufacturer invoices me but ships directly to them in Japan. IS this OK or do I need to pay VAT on these invoices and claim it back?
Any other tax issues I need to be aware of with this proposed business?
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I'm Keith and happy to help you with your question.
That is the manufacturers' problem. They are shipping directly so their invoices will be for exports which are zero rated so there will be no VAT for you to pay on behalf of your Japanese principals. I would submit that you invoices to your principals are also exports and equally zero rated. Be careful though, if your turnover in year approaches or exceeds the registration level of 81K (that is both standard, reduced and zero rated outputs aggregated) in a year you will have to register for VAT and make quarterly returns. Of course, that would enable you to reclaim input tax on any of your business purchases eg office supplies, computer services, telephones etc. Indeed, it mat be advantageous to register for VAT anyway if your input taxes are substantial. I have always found the VAT offices very helpful in registration if you are involved in exports, even if your turnover is well below the 81K as they realise the competitiveness of ones business can be affected by irrecoverable VAT. If those manufacturers do impose VAT you should challenge their invoices, but in any event they are input tax in your books and thus reclaimable.
I do hope I have helped throw some light on VAT for you. In general terms it is relatively simple. I have been doing it since it replaced purchase tax in the 70s.
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Expert:  bigduckontax replied 2 years ago.
Thank you for your support.

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