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bigduckontax
bigduckontax, Accountant
Category: Tax
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I am looking advice in regards ***** ***** tax/vat. I

Customer Question

I am looking for some advice in regards ***** ***** tax/vat.
I am looking to set up a business that imports second hand watches from outside of the EU, somewhere like South Africa for example.
If I purchase the watches I would be able to reclaim the VAT of 14% upon exiting the country however I would like to know the tax implications when 'importing' the watches, would I be subject to pay both the VAT and the duty on the item, I am unsure but thought that second hand watches may not be subject to VAT.
Also if I do need to pay the VAT am I able to sign up to the flat rate scheme and could you explain how this works.
Finally if I purchase watches from another European union country what are my tax implications when bringing them back in to the Uk
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I'm Keith and happy to help you with your question.
Firstly, you would be unable to claim the 14% VAT imposed by overseas organisation as an input. However, most VAT regimes would not charge VAT on exported items.
On arrival in the UK HMRC may impose both import Duty and VAT. The import duty forms part of your cost of sales and the VAT can be reclaimed. However, HMRC do not always bother to charge either and second hand watches are unlikely to cause much comment as an import.
There is no requirement to register for VAT in the UK unless your turnover [ie sales] in any one twelve month period exceeds or approaches 81K. That is an awful lot of second hand watches. Do you really need to register and go through all the palaver of having to account for the tax?
In basic terms the flat rate scheme, providing your turnover does not exceed 150K per annum, works as follows [VAT Notice 733]:
'The Flat Rate Scheme is designed to help small businesses by taking some of the work out of recording VAT sales and purchases. If you use the scheme you apply a single percentage to your turnover in a VAT period. The result is the VAT you pay to HMRC.'
You can read the full VAT Notice 733 here:
https://www.gov.uk/government/publications/vat-notice-733-flat-rate-scheme-for-small-businesses/vat-notice-733-flat-rate-scheme-for-small-businesses
Most second hand goods are subject to VAT if they would have been subject to VAT if new, so watches are in the frame.
There you are, a quick canter through the system. You may feel it unnecessary to register for VAT at all. For me it is a doddle, but then I have been accounting for VAT since its first introduction in the early 70s.
I do hope that I have been able to given you some food for thought and how you might see your way forward with your new venture.

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