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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 6630
Experience:  FCCA FCMA CGMA ACIS
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I am looking to be an online designer and shoes reseller.

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Hi I am looking to be an online designer and shoes reseller. And I need some advice related to taxes?
JA: For which tax year do you need advice?
Customer: I am not sure
JA: Anything else you want the Accountant to know before I connect you?
Customer: No

Hello, I am one of the experts on Just Answer and pleased to be able to help you with your question.

What is your problem, please? Have you registered with HMRC for self employment?

Customer: replied 3 days ago.
No I have not yet.
I am looking to resell italian designer shoes and bag through an online distributor and I am looking to understand what taxes I need to pay.
Customer: replied 3 days ago.
They told me that unless I have an Intra community VAT
I will need to pay 22% (Italian VAT) on each product I purchase through them

Correct, inter EU sales are standard rated for VAT. You can recover the inpot tax if you are registered for VAT.

Customer: replied 3 days ago.
Does it then mean that I need to pay UK taxes at all on the product I am selling?
How it works is that the potential customer will place an order on my website. Once I receive the order from the customer I will need to place it in the DIstributor website and they will look after the shipping
Customer: replied 3 days ago.
Can I register even if I am earning less than 85.000k?
Customer: replied 3 days ago.
Also what else do I need to do to register my business in order for me to be on track with taxes?

Are you selling outwith the EU?

Customer: replied 3 days ago.
I will not
Customer: replied 3 days ago.
Sorry I will only sell within the EU

Supplies within the EU are standard rated. You need not concern yourself with VAT if your turnover is below the threshold which is 85K.

Customer: replied 3 days ago.
Ok but the distributor I am partnering with told me that if I have this VAT# ***** don't need to pay Italian taxes on the products. So what I am trying to understand is: can I register to and get a VAT if my turnover is below £85k?
Customer: replied 3 days ago.
Equally if the answer is no I cannot register and I will only be able to register when my turnover is £85k+. That's fine. Does it mean that I won't need to pay any UK taxes on the products I am selling until my turnover is £85k+?

You can tray, but HMRC may well refuse registration. The distributor has got it wrong. Even if you operate the reverse charge there will still be VAT on the invoice. The other snag is that if you do register you will have to charge VAT on all invoices and have to settle with HMRC quarterly.

If your turnover is below 85K they you need not bother with VAT at all.

Customer: replied 3 days ago.
Oh perfect, so then I think what they meant is: to be able NOT to pay taxes in Italy I need to turnover £85k
Customer: replied 3 days ago.
But when I will tornover £85k I will need to pay UK taxes instead of Italian
Customer: replied 3 days ago.
ones
Customer: replied 3 days ago.
Mmh. Ok and what is the process if I want to start selling outside EU?

Yes, effectively, because you can reclaim the Italian VAT as an input.

If you start selling outside the EU these would be zero tared supplies so you still invoice with VAT, but at 0%. Zero rated sales are aggregated with standard rated sales it determining the turnover level for VAT.

Customer: replied 3 days ago.
Sorry that was a bit too technical what's the difference between zero rated sales and standard rated sales?

Zero rates sales are invoiced with VAT, but at a rate of 0%. Standard rated sales are invoiced with VAT at 20%.

Customer: replied 3 days ago.
if I understand correctly, if I sell in the US for example as long as my turnover is still below the £85k I don't need to pay any UK taxes, right?

Not quite, you will still be subject to UK taxation on any profits you make. As for VAT sales to the States would be a zero rated supply.

Customer: replied 3 days ago.
When you say on any profit I make, do you mean that even if I sell in EU only?
Customer: replied 3 days ago.
let'say I sell something for £100. I will need to pay 22% on Italian taxes for the cost of the product I need to cover. Is there any UK tax that I need to pay?

You do not pay any Italian Tax, but there would be an UK VAT liability were you registered for that tax.

Customer: replied 3 days ago.
That's really weird. They said the following: "You buy the products on the purchase price (on our website) on which we apply you the 22 % of the Italian VAT
Customer: replied 3 days ago.
what I am tying to understand is when I resell the product to a customer, do I need to add any UK VAT?

Yes you do if you are registered for VAT.

Customer: replied 3 days ago.
But if my turnover is less than £85k and therefore I am not registered for VAT I don't, right?

Correct, you can forget all about VAT.

Customer: replied 3 days ago.
it's the same if I am selling to the US? If my turnover is under £85k I can forget about VATs
Customer: replied 3 days ago.
Am I understanding this right?

Yes, you are.

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Customer: replied 3 days ago.
I will do :) Thank you so much for your help

Delighted to have been of assistance.

Thank you for your support.