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Acting as a broker/Agent- is this appropriate?

Is this the best way to do it?

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The company (Limited and Vat Registered) I have acts as a broker selling EU products- the process is simple

Consumers call/email/online order the product from ourselves  (on behalf of the manufacturer) pay money-the total invoice value including vat (at that suppliers rate in that country (its like that as the product attracts a low % vat in some EU member states)

We then make 25% of the sale value so we invoice the EU client ( Zero rated vat) for our % and transfer them the remainder of the fee.

Question- is it ok to do it this way and is there any specific issues which may arrise?

thanks in advance

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By paul.benny
13th Jan 2021 08:03

Yes (it's ok, although tbh depends on a lot of the detail not given in the OP)

And yes (specific issues may arise. Ditto about detail).

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Replying to paul.benny:
By Equine88
13th Jan 2021 10:38


thanks for this, I've elaborated below giving a few examples if this helps clear up the detail

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By Les Howard
13th Jan 2021 09:57

Do check HMRC rules on Agency ( In some situations you can be deemed to act as Principal, even though you are Agent. You would have to account for output tax on the full value of the sale.
There was a reference from the UK Tax Tribunal to the ECJ late last your on precisly this point.

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Replying to leshoward:
By Equine88
13th Jan 2021 10:30

Hi Les

thanks for your comments, appreciate them. a bit more about what we do might guide and shed some light on the situation.

We operate a website which selling products from Belgium, Germany, Ireland (and we are based in Northern Ireland)- our partners supply goods to people in UK and NI and for example supply one product for E1500 ( +6% Vat)

We collect this full value from the client due to the fast nature the decisions need made and proof of payment is required.

Our client invoices the buyers of the product and in turn we invoice our client for 20% commission E300 (zero rated as they are vat reg in EU country)

Mixed in among this we supply a delivery service and charge our clients output 20% vat on this service.

Generally this is taken as all one payment to our bank and then divided appropriately.

ITs sometimes necessary for us to hold some of our partners/clients stock again to make it easily accessible. but it is clearly stated we never own the products its always in their ownership.

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By paul.benny
13th Jan 2021 11:34

You might want to look at VAT700 section 22, which deals with agent/principal sales.
Much will depend on the contractual relationship between you and the principal and also how you hold yourself out as supplying the goods (ie is it clear to the customer who they are contacting with). Not directly a VAT question but also relevant for warranty and liability concerns).

As a general rule, holding stock in a country creates an obligation to register and account for VAT in that country. If you are holding supplier stock in UK, the supplier should probably be VAT-registered in UK.

Your arrangement has been made more complex by Brexit and the special rules for NI. You would be well-advised to take (paid-for) advice from someone who can take the time to understand the full facts of the matter.

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