Hello, I am Keith, one of the esperts on Just Answer, and pleased to be able to help you with your question.
Your sales to the US would be exports, a zero rated supply, so although subject to VAT the rate is 0%.
The VAT threshold for registration is 83K. If sales at standard rate, reduced rate and zero rate aggregate to this amount in any one year then the company must register for VAT and charge same on its invoices. Of course, all input tax may be reclaimed on a quarterly basis. A solution might be to run two companies.
I am soi sorry to have to rain on your parade.
1. If it is zero rated, how does that work if my company registers for VAT but the rate is 0%? So the cost of goods to my US customers has 0% VAT? So what would I be reclaiming?
2. Please advise what you mean about running two companies.
You would be reclaiming any input tax for supplies etc paid out by the company.
If you operated through two companies you could keep sales below the threshold between the companies and thus not have to bother about VAT.
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So effectively if I only sell to US customers, I would do not need to charge VAT to the US customers and I can then reclaim VAT for supplies I pay for?
How is VAT treated if I then later branch out to sell to customers in:
1. Non EU international countries eg Canada, Australia, New Zealand etc?
2. If I then sell to EU or UK countries?
3. If I end up with worldwide customers, I charge VAT to customers in EU countries only?
Correct (technically VAT is charged but at 0%), assuming that the company is registered for VAT.
1. Same as the US, they are exports.
2. All standard rated supplies, but if for EU sales excluding the UK, if you have the VAT or equivalent number of the customer, then the Reverse Charge system can apply. Under this system you charge VAT at the standard rate, but at the same time make an input tax entry for the same amount thus effectively for your company making the supply zero rated. An EU Sales List must ve rendered periodically to cover all Reverse Charge transactions.
Correct, at the standard rate, 20%.
The VAT turnover threshold is for the aggregate of all sales, standard, reduced or zero rated. It is only where exempt supplies, and you do not make these, are involved and these do not count. For example doctors and dentists make exempt supplies for treatments.
To be pedantic the invoice should show VAT charged at 0%.
Yes, you can find the HMRC conversion detail here:
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Thank you for your support.