Accountants will be familiar with the phrase commonly used by some clients “my friend down the pubs says…”
To save on time attempting to explain why the latest tax wheeze their mate has solemnly sworn works, won’t, here’s a digest of four common VAT myths and the explanations debunking them.
Gill Yates, head of VAT services at vat-penalties.co.uk gave a lowdown on myths at Accountex recently, based on ones that had been referred to her company as a specialist VAT firm.
#1 If you are selling to someone not UK based, you don’t need to charge VAT
As Yates explained, there are many nuances in this area.
For suppliers of goods to EU VAT registered businesses, supplies are zero rated. But this is subject to evidence of both customer status and the physical movement of goods.
Supplies to non-EU businesses are also zero rated, subject to evidence of physical movement of goods.
When it comes to supplying goods to non-UK private customers however, distance applies in the case of selling to those EU-based.
Once the distance selling threshold is met, you then need to register for VAT in that country. Sellers need to be aware that the rate varies by country, i.e. in Germany if you sell £100,000 worth of goods, you have to then charge the German rate of VAT.
#2 You don’t need to register for...