Tax Consequences FINAL A/W 30/10/01 5:09 pm Page 1
VAT abroad Do I have to pay VAT on goods ordered from abroad? The VAT paid on imports depends on whether the transaction is inside or outside of the EU. If the company you are buying from is registered for VAT in an EU country, then you will need to pay the VAT in that particular country. However, you will not need to pay VAT when the goods enter the UK, as long as you can provide documentation to prove that the VAT has been paid in the country of origin. If the company you are buying from is outside the EU, then you will not have to pay any VAT up to a price limit of £18. For goods above this threshold, duty and VAT is then paid at point of entry. For VAT purposes the Channel Islands, Canary Islands and Gibraltar are outside of the EU therefore import duty and VAT would be charged on goods ordered from these countries.
Should I charge VAT on goods sold abroad? Again, this depends on whether or not the country you are supplying the goods to is in the EU. If the goods are being sold to a VAT registered company in the EU, then VAT should not be charged. If the company is not registered then you will need to charge VAT. It is not necessary to charge VAT if the company is outside the EU.
WHAT ARE THE TAX CONSEQUENCES OF TRADING ONLINE? Does it matter in what currency I deal with customers from overseas? If you are dealing with customers from overseas, you may wish to invoice, or you may be invoiced in, a different currency from the currency of your accounts. Invoicing, and receiving or making payments in currencies other than the currency of your accounts, including the Euro, may give rise to exchange differences. These will normally need to be recognised for tax purposes. It may be worth getting a professional accountant’s help to deal with any foreign exchange differences.
Infoline: 0845 715 2000 Web site: www.ukonlineforbusiness.gov.uk
For more information on trading online contact your local UK online for business adviser by calling the Infoline on 0845 715 2000 or visit the web site at
www.ukonlineforbusiness.gov.uk For specific tax advice contact your local tax office or visit the Inland Revenue’s web site at www.inlandrevenue.gov.uk For further information on duty, VAT and imports and exports call the National Advice Service on 0845 010 9000 or visit the HM Customs and Excise web site at www.hmce.gov.uk
Printed in the UK on recycled paper with a minimum HMSO score of 75. November 2001. Department of Trade and Industry. http://www.dti.gov.uk/ © Crown Copyright. URN 01/1369 RING THE UK ONLINE FOR BUSINESS INFOLINE ON 0845 715 2000 OR VISIT THE WEB SITE AT www.ukonlineforbusiness.gov.uk