How does it all work

[reid114]

Hello forgive me if I sound a bit naive here but this is all new to me.
I have set up a retail Ltd business selling electrical goods on a auction web site.
If I buy my stock new I am charged VAT by the distributer.
Do I need to charge VAT when I resell to customers
as I need to keep my prices low.
If so what costs do I incur and can I claim back the VAT charged to me for listing fees to place my products on the auction site.

Thanks
Rodney

[paultaylor@vatease.c]

Rodney,

This is a fairly simple question but a full answer would be quite lengthy as it involves most of the basics of VAT.

You do not charge VAT on your sales, or claim VAT on your purchases, unless you are registered for VAT. If your taxable income is over £56,000 you MUST register for VAT. If your income is below £56k you CAN register for VAT.

If your customers are mainly UK based private individuals then it is likely that you will want to stay unregistered so that you don't have to add VAT to your selling price.

If your customers are outside the UK, or VAT registered businesses, then you will probably want to register for VAT so that you can claim VAT back on your purchases.

If you choose, or are required, to register it is likely that your supplies will be subject to VAT at 17.5%, unless sold to someone outside of the UK.

The above is an extremely basic guide. If you require further information I recommend you speak to HM C&E, your accountant or a VAT specialist.

Regards

Paul Taylor
http://www.vatease.co.uk/