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Who has made the Sales

Who has made the Sales

I have the following scenario and am wondering whether someone could comment.

Company A is a UK based online business delivering legitimate products globally but the nature of products would be frowned upon by most banks so Merchant Account is a problem.  Company B is based in another EC country unrelated to Company A.

Company A would take orders on their site from consumers all over the world but check out would be via Company B's as if all orders are via Company B.  Company A would make the deliveries once payments are confirmed by Company B.  Are sales made by Company A or Company B, particularly that it is Company B's site eventually accept orders and payments?  If all sales are made by Company B which is an EC company, does Company A still need to account for VAT if goods are delivered to the UK and EC consumers?

Any comments would be appreciated.

Eddie

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By Hansa
24th May 2012 19:35

Agency agreement

This is (and should be constructed as) an "Undisclosed Agency Agreement" whereby "B" acts in the name of "A".  Simply: -

A is the undisclosed principal

B is the agent

B effects the sale on behalf of A and remits everything (less it's commission of, say, 10%) back to A (which fulfils the contract on behalf of B legally, but itself practically).  The Invoice (if such a thing is offered) should be from B, not A.  Be careful about VAT as different countries interpret the rules differently.

Send me a PM if you need further assistance.

 

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sarah douglas
25th May 2012 00:03

Agency agreement

Hi Hansa, many thanks for the comment.

If sales are on B, then how B accounts for VAT in his country is not really A's concern.  However, A needs to account for the receipts from B.  It would be suspicious if A treats 100% sales to B, says in Belgium, without charging VAT even though 50% of goods are for UK and EC individual consumers.  If with VAT, B might have a problem to claim it back in Belgium.  I have to stress that it involves £400K turnovers a month.  The amount of VAT is substantial.  HMRC and its counterpart can be a problem for both A and B.  Maybe there is something quite simple that I cannot see the wood for the trees at the moment.  Just need someone to enlighten me.

Eddie

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