VAT Returns if Supplier charges me 0% VAT (Output Tax)

by **si0795** on Thu Feb 02, 2012 5:26 am

Hi im a dropshipper selling comsumer electronics online from suppliers based in France who are not charging me any VAT provided that i registered for VAT in this country, therefore only reason i registered for VAT is because they would sell me thier products EXC the VAT rate of 19.6% in France. I do not own any initial stock, i pass on the order to the supplier once a customer has placed an order.

Now when i file my VAt returns i basically pay HMRC 'the difference between my output tax and input tax' - In other words i have to pay the difference between the VAT that i charged My customers (20%) to the VAT that my suppliers charged me (0%). Therefore I cannot possibly make any profit if i am paying back the entire VAT rate i charged my customers.

I'm extremely confused on how much VAT I will be paying back to HMRC. Please Help.

by **si0795** on Thu Feb 02, 2012 7:37 am

si0795 wrote:Hi im a dropshipper selling comsumer electronics online from suppliers based in France who are not charging me any VAT provided that i registered for VAT in this country, therefore only reason i registered for VAT is because they would sell me thier products EXC the VAT rate of 19.6% in France. I do not own any initial stock, i pass on the order to the supplier once a customer has placed an order.

Now when i file my VAt returns i basically pay HMRC 'the difference between my output tax and input tax' - In other words i have to pay the difference between the VAT that i charged My customers (20%) to the VAT that my suppliers charged me (0%). Therefore I cannot possibly make any profit if i am paying back the entire VAT rate i charged my customers.

I'm extremely confused on how much VAT I will be paying back to HMRC. Please Help.

SORRY THE TITLE SHOULD END WITH (INPUT TAX) NOT OUTPUT TAX.