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bigduckontax
bigduckontax, Accountant
Category: Tax
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if l a sole trader in the UK do l have to pay VAT on the purchase

Customer Question

if l a sole trader in the UK do l have to pay VAT on the purchase of a secondhand machine that l buy in Italy
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I'm Keith and happy to help you with your question.
If Customs impose an Import Duty and VAT on the item when it comes into the country then indeed you do. The machine will not be released until these imposts are paid. Such duties are not always charged. The Import Duty becomes part of your cost of sales or part of the capital cost depending on your intended use of the machine and the VAT may be reclaimed as input tax in your quarterly return.
VAT is, in general terms, chargeable on second hand items which, were they new, would be standard, reduced or zero rated products.
I do hope that I have thrown some light on your question.
Customer: replied 2 years ago.

There isnt any import dutys to be paid, But the agent l buying the machine from said to me they wanted my company registration number or vat number so it would be zero vat to pay but l dont have any numbers as lm a sole trader so does that l have to pay VAT ?

Expert:  bigduckontax replied 2 years ago.
Right, the Italian firm require your VAT number so they can undertake what is known as a reverse charge. With a reverse charge they will charge VAT on the sale as an output tax and immediately reclaim it as input tax thus making it effectively zero rated. As you are not registered for VAT they cannot do this so must charge the tax on sale to you.
So yes, you do have to pay the VAT.
As a sole trader if your turnover exceeds or approaches 81K in any year, you must register your business for VAT.
I am so sorry to have to rain on your parade.
bigduckontax and other Tax Specialists are ready to help you
Expert:  bigduckontax replied 2 years ago.
Thank you for your support.