"UK Companies Charging VAT to US Buyers" Topic

Okay, I just had a UK company tell me they don't discount VAT on orders under £50.00 GBP I thought buyers in the US should never be charged VAT?

Only if the company you're buying from is big enough to be VAT registered.

Seems strange about the "orders over £50.00 GBP only" though.

I was never charged VAT for any amount for my orders from UK to USA from VAT-registered companies…Maybe this is a disguised fee for small orders???

Most of us don't earn enough to worry about VAT in this industry. It does sound strange…

I'm sure some other taxes (export/import) might come in if they are selling to the US over a certain amount instead, but not VAT. Stuff I should know about but don't…

I think I found the correct notice on the HM Revenue & Customs website: tinyurl.com/9gl2h

Looking briefly at section 2.2, it looks like all legitimate exports delivered within 3 months should be zero-rated for VAT.

If the company *is* VAT-registered, provide them with that reference. If they refuse to comply, a nice little letter to HM Revenue & Cutoms ought to result in a cheeful little visit to the company. Businesses always enjoy the tax man going through their books.

And please tell us who it is.

Allen

Yep,

If they are taking VAT and then not passing it on to the Inland Revenue they are not only ripping off their customers (bad enough) but they are breaking the law.

And in Britain the one authority you don't mess with above all others is the Tax or Customs people. They have powers that make a dictatorship look like a nursery.

Tricks

I'm not going to go reporting them to the revenuers over $8.00, but I might not buy from them again. That would be a shame for me, as I've ordered a fair amount from them in the past, although through resellers, and certainly intended on continuing to do so.

I poltiely provided the reference. We'll see what happens.

Okay, I'll clear up something here. You don't pay VAT, the companies do, what they do is pass on the VAT charge to you. So if a company is selling something for £10.00 GBP (and VAT registered), 17.5% of that is VAT and the company will take your £10.00 GBP and pass along £1.75 GBP to the tax man.

Now then, a US guy who buys things in the UK while he is in the UK is charged VAT on everything he buys. However he can fill in the forms and get the money back.

A US guy who is not in the UK and orders things from here does not get charged VAT. End of story! The company does not have to pay any VAT money to the tax man. It is entirely up to the company whether they wish to deduct the equivalent amount from the price. They are not doing anything illegal by not reducing the price. Many companies do deduct the price as they end up with the same amount as a UK sale anyway.

Bear in mind though that many games companies do not make enough money to pay VAT in the first place and therefore will not be able to reduce the amount accordingly.

And yes, I know far too much about VAT, my mother-in-law is a high level tax inspector for the Revenue, my father-in-law is a tax accountant and my wife is a payroll clerk. She wasn't when I met her.

That said however, if they mess up and your invoice shows VAT on it, then you have a case for complaint. I'm fairly sure that you can make a claim against that.

not again….. Why do you guys have to moan so much about VAT?? most miniatures companies do not reach the VAT threshold and thus no VAT discount!

Thanks for the info, Dewbakuk. That does clear it up, I guess I'm used to thinking of it as the US sales tax, which is paid directly by the consumer. It still irritates me that I wouldn't get a discount, though.

Totallycheapminiatures, this company does reach the VAT threshold, a buddy and I just got the discount on a larger order.

I don't think I was moaning about the VAT as much as making sure I understood how it was applied. Why should I pay more for miniatures than I have to?

Can someone explain the concept of "most miniatures companies do not reach the VAT threshold and thus no VAT discount"?

Is this simply that their revenues are below a limit for VAT to apply…so their prices do not include VAT (even for UK customers)?

I would consider it dishonest to not pass on a VAT "discount" to US customers. I would think that the seller would list the price of the item and add the VAT on at the end (like sales tax in some parts of the USA).

VAT is a real pain in the bum, we went over the legal limit and so have to pay VAT on what we charge but have not put the prices up to match what we have to pay.

Jules

'cause presumably this one charged Andy for VAT, when they shouldn't have?

'Tis a mystery, and a fine one at that…

:-)

Later,
Markus

The GW UK online store does not mention any exemption from VAT for overseas customers …

If a given boxset is marked up at £20.00 GBP and you agree to buy it for £20.00 GBP and your no in the UK, I cant see why you assume 17.5% should be knocked off.

If that is the price inclusive of VAT, and if the seller is VAT registered, then the seller ought to deduct the VAT from the price when selling overseas.

Note that most sellers do not have separate prices listed with and without VAT, so in practical terms the buyer is essentially stuck with selecting the item at the VAT-inclusive price.

The lack of an explicit choice to purchase at a VAT-exclusive price should not excuse the seller from deducting it.

As on another thread, I see once again that some of us would have supported the tea taxation rationale for the American Revolution, while others would have been in favour of exploiting tea consumers …

Just to fill in the blanks,

A sole Trader, Ltd Company or Partnership is only required by Law to pay VAT if the threshold of £55,000 is exceeded in any one year. Many businesses (I was one once) do however voluntarily become VAT registered as it opens up their client base e.g. big PLC will require small business providing service/product as they can then claim VAT back off their costs

In this particular case, I sent my order with the VAT discounted, called the next day to give my CC number (with no mention of a problem with my calculations) and got a message today that they had shipped the order and BTW they don't discount VAT for orders under £50.00. It's not the end of the world, but it's not great customer service to be sure.

Sir James

yes.

If as a company your turnover is below a certain threshold (I forget how much but I think £55,000 a year or some such) then you are not liable for VAT. It is based purely on how much turnover your company does a year.

So if your turnover is below that level you are not charged anything by the VAT people and do not pass on any VAT costs to your customers no matter where they live.

Tricks

Just before anyone thinks they should get a 17.5% "VAT discount" the maths doesn't work that way.

VAT is added at 17.5% to the ex-VAT price get to a final price not deducted from the final price to get the ex-VAT price… (it's approximately a 14.89% deduction that way around).

That is a good point, PaddySinclair, thanks.

We quite deliberately stay below the VAT threshold even if it means pulling the odd range of models now and again.

It keeps our prices down, I don't become an unpaid tax collector and, Tricks tell me otherwise, I don't make a VAT contribution to the great Eurozone. Who in turn have done nothing for me.

Mike B

Now I'm thoroughly confused. Isn't VAT automatically included in U.K. prices? And with the 55,000 pounds sterling ceiling,does this mean that bigger wargames companies are including VAT in their prices while smaller ones aren't? Why do I feel that I'm being ripped off somehow?

Being ripped off! Its a government charging you a tax, of course you are being ripped off!!!

Mike,

The "great Eurozone" means I can order my gaming supplies direct from UK without going through customs and without re-paying the VAT that was never discounted anyway.

This increased my gaming expenditure VASTLY and directed most of it to smaller firms like yours.

Without EU, anything I bought from you would be slapped an approximate +30% of taxes & tolls on top, nevermind the hassle. That kind of thing tends to affect purchase decisions. It is e.g. the reason I order Tehnolog stuff rather from a UK retailer than direct from Russia.

Maxxon

but without the "great Eurozone" we in the Uk would not be paying VAT anyway as it is a tax introduced at the instigation of the EU and the minumum levels of which are set by the EU. Why do you think you now have to pay VAT on your heating fuel or gas and electricity? Thanks EU.

Tricks

Hahhahahaha! The classic line! "We, the great reformers, will make your life better by doing X!! But we'll also be sneaking in miscellaneuos (and individually unobtrusive) taxes/rules/what-have-you to neutralize whatever we do. Give your money to your government! You are too stupid to be trusted with it anyway!"

Would you prefer a tax on tea…?

Uh oh, the VAT thread is threatening to spiral into a political-economic discussion on the merits and faults of the social-welfare state and governments authority vis a vis collection of revenue and providing services…

not again!

;-)

Doesn't it always??

:-))

Hey lets play a game of seeing how long we can keep this one OFF the CA board since it is carrying some fairly important information for buyers.

I hereby promise not to mention the EU again as that is a sure door opener and will not be nasty to tax collectors who are only people trying to do their jobs as best they can. (I think I managed to keep a straight face when I said that)

Tricks

…and they did not reply to my e-mail today.

The VAT threshold is now £60,000. If a firms turnover exceeds this figure, the tax kicks in. Under it – no tax.

Customers outside the EU normally pay no VAT (there are certain conditions, but that's the essence of it).

If a firm is genuinely VAT registered (they not be. It may simply be a scam), and they are a charging it to US customers (check the invoice to see if it appears under that heading and whether or not a VAT number is given), they have to hand it over to the Revenue.

If a company isn't VAT registered they cannot claim back their VAT on expenses against VAT on their sales.

So they still pay VAT on their supplies but don't add on an extra margin for their VAT 7/47ths (i think)… so in effect they are the end consumer paying the VAT and unable to claim it back.

So they cannot give overseas customers "VAT discounts" if they are not VAT registered (which should be on all receipts and invoices)

Alternatively they not want the hassle of form filling for small orders… hense their self imposed £50.00 GBP limit. I suspect that this may be the reason… credit card charge.. low profit margin.. make it "not worth them doing the paper work".

I'll put in my take on VAT just to add to the noise!

In the UK, sales prices to consumers normally include VAT, but on business oriented sites/catalogs normally are listed withou VAT (usually with the VAT amount shown in small print).

This is because most companies are VAT regisered and therefore get to claim VAT back on purchases, and must collect VAT on sales of most items.

Not all products attract VAT — books are a major exception.

As is stated above some smaller companies are not VAT registered, and therefore don't add VAT to their prices (but also can't reclaim VAT on purchases).

Now for overseas purchases. EU VAT is still charged, outside EU VAT shouldn't be charged. For EU companies with VAT numbers then they can also reclaim VAT.

All VAT charged on sales has to be passed to Customs & Excise. The VAT inspector is probably the most feared person to appear at a small business.

As to practicallities, it is not uncommon for websites and order processing software not to deal with overseas VAT very well. Often requiring a manual overide to zero VAT.

Generally it is safer for a company to charge VAT (and pass this onto the Gov), than to get exceptions wrong and not collect VAT. Not only do companies act as unpaid tax collectors, if they get it wrong they get heavily fined.

As to the original question. An order from a US customer should be VAT exempt (but it needs to be known if the company is VAT registered or not, for this to have any effect on the sale price).

I certainly have never heard of a £50.00 GBP minimum for VAT exemption.

But I don't know if Customs and Excise would be too bothered, as along as the VAT is passed on to them.

I'm not an accountant, but do seem to have to deal with VAT far too much at work.