When signing the contract with my supplier, I believed I wouldn’t have to pay VAT on my stock purchases as I’m importing goods from the EU. We agreed on prices, and I’m supposed to be making around 30% margin on every sale.
However, when my supplier found out that I’m not VAT registered they said that they have to charge me VAT. Are they right??
Your supplier is correct, you need to suffer the vat which is an extra cost to your business , this generally puts you in the same position as you would be had you bought the goods from a uk supplier where vat would almost certainly have been charged.
https://www.gov.uk/guidance/vat-imports ... rom-abroad
Not VAT registered
If you are not VAT registered and receive goods from other countries in the EU, your supplier will charge VAT at the local rate in the EU country from which the goods are supplied. If you‘re not already registered for VAT in the UK and buy goods worth £81,000 or more in the UK from other EU countries, please read VAT registration for further information.
I don’t have many options to claim VAT back on. My main costs are Google Adsense and Facebook ads, and they don’t charge VAT because it’s the EU. (Here is a thought, Google and FB don’t charge VAT even though I’m not VAT registered, so why does my supplier do?).
strangely the rules for services allow this situation in that all they need is evidence that you are in business for them to have the right not to charge you local vat.