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tax briefcase

When a UK business makes sales to overseas customers, it can be a little confusing at first when deciding how to treat VAT.  Here are a few tips for preparing invoices for export sales of goods from a UK supplier’s perspective. Be sure to check out our other guide for how to invoice for services which are slightly different.

The following applies to a UK trader who is VAT registered.

  • If a customer is a business based in a country within the EU, and is also VAT registered, then the invoice should not contain UK VAT as the sale is considered to be Zero rated.Note: to qualify for zero rate, the customers VAT number must be quoted on the sales invoice in addition to the suppliers VAT number which should be quoted on all sales invoices.
  • If the customer is a small business in an EU country, and is not VAT registered, or alternatively is an end consumer, then UK VAT must be charged as normal on the invoice.
  • If the customer is outside of the EU, then no VAT should be charged. The customers VAT number is not required.

There are a few other items which are also important when preparing documentation for exports.

  • Proof of export must be obtained within three months of the sale and must be retained for potential inspection.
  • Zero rated VAT is later dealt with on the UK suppliers VAT return using the reverse charge mechanism.
  • All of the above applies only to UK companies who are VAT registered.
  • Sole Traders who are not VAT registered must not charge VAT under any circumstances.

Transform Accounting are Chartered Management Accountants and Tax Technicians able to assist with personal tax returns, sole traders and company payroll whilst specialising in limited companies, consultants, contractors and business start-ups. Fixed fee packages are available as are free initial consultations. Customer references are available on request.

See www.transformaccounting.co.uk or contact Jacinta Smith on 01277 365447

Accountant BrentwoodTransform AccountingEssex Accountants

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tax briefcase

When a UK business makes sales to overseas customers, it can be a little confusing at first when deciding how to treat VAT.  Here are a few tips for preparing invoices for export sales of services from a UK supplier’s perspective. Be sure to check out our other guide for how to invoice for goods which are slightly different.

The following applies to a UK trader who is VAT registered.

  • If the customer is in a country within the European Union, then the invoice should not contain VAT as the sale is considered to be zero rated. Note: Unlike the supply of goods, for the supply of services to be zero rated, the customer must merely be a business and does not have to be a VAT registered business.
  • If the customer is in the European Union and is not a business ( ie – is a consumer), then the sales invoice should be prepared including VAT
  • If the customer is outside the European Union, the invoice should be treated as zero rated regardless of whether the customer is either a business or a consumer. The customers VAT number is not required.

There are a few other items which are also important when preparing documentation for exports;

  • The basic rule for establishing where a services transaction is deemed to have taken place is usually the location of the customer.
  • Zero rated VAT is later dealt with on the UK suppliers VAT return using the reverse charge mechanism.
  • All of the above applies only to UK companies who are VAT registered.
  • Sole Traders who are not VAT registered must not charge VAT under any circumstances.

Transform Accounting are Chartered Management Accountants and Tax Technicians able to assist with personal tax returns, sole traders and company payroll whilst specialising in limited companies, consultants, contractors and business start-ups. Fixed fee packages are available as are free initial consultations. Customer references are available on request.

See www.transformaccounting.co.uk or contact Jacinta Smith on 01277 365447

Writtle AccountantTransform AccountingEssex Accountants

 

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tax briefcase

The normal rules for sales to consumers in the UK from a supplier outside the European Union (eg – Jersey or the USA) are that the UK VAT must be paid by the consumer when the goods are collected.

For example, an item with a value of £100 imported from the USA would incur a £20 VAT charge when collected by the end consumer.

However, there is an exception to this rule

An item with a value up to £18 has historically been allowed to be imported into the UK VAT free. This arrangement was historically put in place to allow perishable foodstuffs through with no delay, but in more recent times this has been used by importers of CD’s and DVD’s (often based in Jersey) to give a competitive edge over UK retailers who have to charge 20% more in the form of VAT.

From the 1st Nov 2011, the UK government reduced this amount to £15 and is continuing to review this situation so watch out for further changes.

Transform Accounting are Chartered Management Accountants and Tax Technicians able to assist with personal tax returns, sole traders and company payroll whilst specialising in limited companies, consultants, contractors and business start-ups. Fixed fee packages are available as are free initial consultations. Customer references are available on request.

See www.transformaccounting.co.uk or contact Jacinta Smith on 01277 365447

Accountant RomfordTransform AccountingEssex Accountants

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pound sign

If you are lucky enough to have friends or family or friends who live outside of the UK who send you gifts for Christmas or Birthdays, then it is quite possible that you may have experienced a delay in receiving your gift, or even have had to pay a VAT charge before they are released by customs.

The reason for this is that there is a threshold as to the maximum value for such a gift before UK VAT is charged.

Every year on the 1st January, the UK reviews the level where this threshold is set.

For 2013, the UK limit has been revised to £36.

This means that any gift with a declared value of £36 or less will incur no UK VAT charge and should be delivered smoothly whilst gifts with a declared value greater than £36 may require UK VAT to be paid and the delivery may be held up until this payment is made.

For those lucky enough to have friends or family living in European Union countries such as Spain or Ireland, there is no such restriction so encourage these generous folks to send you expensive presents !

Transform Accounting are Chartered Management Accountants and Tax Technicians able to assist with personal tax returns, sole traders and company payroll whilst specialising in limited companies, consultants, contractors and business start-ups. Fixed fee packages are available as are free initial consultations. Customer references are available on request.

See www.transformaccounting.co.uk or contact Jacinta Smith on 01277 365447

Accountant BrentwoodTransform AccountingEssex Accountants

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The wholesale price of a litre of petrol fell from 54pence at the beginning of October to 45pence at the end of the month.

Wouldn’t it be great if that was the price that motorists could pay, but the “wholesale” price is the price that retailers pay for their petrol before adding profit margins, fuel duty and VAT and selling it on to the UK’s motorises.

So, if the price to retailers has fallen by nearly 10pence, how much has the cost to consumers fallen in that same time period?

The answer? Less than 4p.

Something seems very wrong here, as VAT should have increased this difference from 9p to 11p, not decreased it to 4p.

So where has this difference gone?

There is very little transparency about wholesale fuel costs so it can be hard to identify where the blame lies. The obvious candidate is fuel retailers, but in the summer the Daily Telegraph newspaper identified that motorists had been paying too much for their fuel because banks and other traders are likely to have manipulated oil prices in the same was as they rigged the libor interest rate.

Calls from groups such as the Automobile Association for the Chancellor George Osborne to get a grip on price manipulation are now increasing in volume, but for now, it appears that an increase in fuel prices is passed on to the motorists almost immediately whilst a fall in the wholesale price seems to take an age to be seen at the pumps.

Accountant ChelmsfordTransform AccountingEssex Accountants

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Pressure on Chancellor of the Exchequer George Osborne to scrap the planned 3p per litre increase in fuel duty has increased in recent weeks.

The tax increase was originally supposed to be introduced in August, but was postponed by the Chancellor for five months in light of the poor economic performance in the UK.

Even the chairman of Asda, one of the UK’s largest supermarket chains and fuel retailer has joined in these calls. Andy Clarke reminded the Chancellor that the rise would come at the worst time for families facing rising energy costs. “With households feeling the cost of Christmas and energy price rises”, now was not the time to put more pressure on spending by raising fuel costs.

But as to whether the chancellor listens to these calls, or can afford to abandon the proposed rise remains to be seen.

If he remains resolute with his plans, remember to fill up on New Years Eve !

Accountant BrentwoodTransform AccountingEssex Accountants

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In the last budget, the government proposed extending VAT to cover the sales of static caravans.

For someone buying a caravan with a value of £20,000, this additional 20% tax would result in the cost increasing to £24,000.
Perhaps not surprisingly in the middle of a recession, this has alarmed UK caravan manufacturers and dealers, fearing for the future of their businesses.

The proposed tax increases are due to come into effect in October, but we are currently in a period of consultation. A petition containing tens of thousands of names was supported by a number of cross party MP’s and they are hopeful that George Osborne will follow many of his recent climb downs such as the pasty tax and change his mind before this comes into effect.

In the meantime, if you are considering buying a fixed caravan, it might be better to act before October just in case.

Accountant Brentwood – Transform Accounting – The Essex Accountant

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