Hello. I’ve been reading around this topic online today but can’t seem to find a settled answer to the question. I’d be grateful for advice here if anyone can help (I accept we take full responsibility for our own actions).
We sell about one item a month to customers in Australia. We use PayPal for these transactions. The transaction is between us and private customers, not a reseller or whatever, and is a remote transaction as we are in the UK. We are VAT-registered. Should we charge VAT on the sale, and on the postage? We list the product charge and the delivery charge separately on our invoices. We aren’t members of any export schemes or registered for anything special with overseas sales or anything like that.
Looking at the information available, the answer seems to depend on about 100 things and envisage far more complicated set-ups than ours.
Doesn’t matter where they are from, your sales include UK VAT unless they provide you with some sort of VAT ID that HMRC says is acceptable to be used for charging NET amounts.
As you mention private customers this is unlikely to be relevant anyway, so your invoice to this individual in Australia should include VAT. Regarding VAT on the postage, this would be down to the relevant rules and guidance from HMRC on VAT on postage, again the customer being Australian is irrelevant in this.
Thanks Lurch. That’s reassuring because we have been charging VAT as we understood the situation to be as you described, but doubt had been raised and I wanted to double check.
@FaradayKeynes useful little table, thanks, though I would dispute the entry for “buying goods B2B from VAT registered supplier in the EU”
Reverse Charge VAT Box 2,4,7 & 9 and Reverse charge sales list (RCSL) if goods are £5000 or more
(a) It isn’t called “reverse charge” when it’s sales of goods between EC countries, it’s called “acquisition tax” instead (it’s only called reverse charge when it’s services), and (b) I thought RCSL was only for UK domestic reverse charge transactions (selling wholesale mobile phones and computer chips to UK business customers where the customer has to reverse charge the VAT), not EC sales.
Thanks for feedback Ian. The table is a general guideline as its not possible to summaries all complexities of vat in one table. When goods are bought from EU on the provision of vat number, vat is made zero but its accounted for in a similar way as a reverse charge for services though figures dont end up in same boxes
Goods from EU countries
If you’re registered for VAT in the UK and receive goods from countries in the EU you’ll normally account for the VAT through your VAT Return. You’ll need to account for the VAT at the same rate that you would have paid if you had bought them from a UK supplier. This VAT is known as acquisition tax and you can normally reclaim this if the acquisitions relate to VAT taxable supplies that you make.
RCSL is for UK B2B, you are right perhaps I should add wording UK wholesale business for more clarity and move to the first table or better remove it as it comes under special goods vat topic.
Yes, that was my point - one of my bugbears with QuickFile is the fact that they have a checkbox on purchases that is labelled “apply reverse charge”, but the box doesn’t do what it says. When talking about cross-border purchases the term “reverse charge” in HMRC guidance always applies to services, never goods, yet the “apply reverse charge” box in QuickFile uses the rules for goods, not services… which is needlessly confusing in both directions.
Hi, if you are sending by post I assume you are selling goods? In which case, if you are posting directly to Australia you can zero-rate the goods, and therefore the postage. You will need proof of posting overseas, but the Post Office can easily supply this.
If the goods are sent to a third party within the UK or EU for onward shipping, then the goods would be standard-rated.
Thank you everyone for your replies. As I understand it, selling goods to a private individual in Australia we can charge VAT, but there are routes to take to allow us to zero rate it. Would that be a fair summation?
I guess so, but given there’s the option to zero rate why would you choose to charge your customers 20% more than you need to with no benefit to you? Particularly as the customer will probably also have to pay Australian GST on their import to get it released from customs, the same as we have to pay import VAT in the UK.
I guess it’s more a case of neither way would be wrong?
I wonder if other countries have similar rules? Just had an issue with a German supplier charging me German VAT (Amazon at fault here though as they are hopeless) but they just sent me a revised invoice with the VAT removed, but the total still being the same!
@Lurch the rules for moving goods between countries within the EU VAT area (which still includes the UK until the end of transition) are different from the rules for importing/exporting outside the EU. A German supplier is correct to charge German VAT to a UK consumer, but they would zero rate the same shipment to a consumer in Australia (or to a VAT registered business in the UK).
I was buying as a business though, which is where Amazon falls down as even though I have a business Amazon account with the relevant VAT ID provided it never gets passed on/handled properly.
But yes, being within the EU is different again. Just a barely related pointless anecdote, I’ll shut up now.
Fair enough. I think it’s a case of having always done it that way (with no complaints yet) and feeling a little nervous about making a change that could bite us on the bum if we got it wrong. Sales to Australia are about one a month, so it isn’t yet a big issue.
Hello Heather.
I worked in the Export-Import industry.
Whether you sell to an individual or company OUTSIDE the EU and can prove that you EXPORTED the goods the whole transaction is ZERO Rated.
From 1st January 2021 this may also apply to EU countries as you will be exporting from the UK. Depends on any deal or No deal.
