First VAT return

Input VAT on stock

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Hi, we have recently been registered for VAT and have to submit our first return.

We have been purchasing items from China and selling on Amazon UK for last 2 years and had to get registered for VAT due to exceeding the £85k thershold.

Now in order to do the return, I have all the Amazon sales invoices so output VAT is sorted. However can we claim back any input VAT on the inventory purchased and imported from China? It was imported on DDP terms (i.e. all duties and taxes are paid by the freight forwarder) and freight forwarder only issued an invoice with a total shipment charge. Therefore although we effectively paid VAT and customs duties as shipping charges but the invoice doesn't show the breakup. 

It seems a bit illogical that I can claim no Input VAT on my stock shipments when we paid one inclusive higher shipment charges?

Appreciate your guidance.


Replies (5)

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By David Ex
02nd Mar 2024 13:33

You need an accountant.

Other professional bodies are available.

“If you intend to plan a course of action based on what you read in here, you should instead be taking professional advice.”

“They are not here to provide free accounting advice.”

Thanks (3)
By VATs-enough
02nd Mar 2024 19:14

If imported on DDP terms its not 'your' VAT to claim, its the sellers.

But you say the freight forwarder has issued you an invoice for the import duties? Thats not DDP?

Thanks (2)
By Jason Croke
02nd Mar 2024 19:26

You can't reclaim input tax on stock you've imported and since sold, you may be able to reclaim input tax on stock you still have/unsold at date of registration.

As HMRC will review your first VAT return once submitted and ask for copies of invoices, you need to make sure it is right, else penalties could apply.

DDP means the seller paid the import VAT, so there is no VAT for you to reclaim anyway whether stock sold or not.

Thanks (5)
By FactChecker
02nd Mar 2024 19:53

On a general point, there's no such concept as "we effectively paid VAT" ... so the need for using such a word is usually a clear indication that in fact it wasn't paid.

Two experts have pointed out the core misunderstanding under which you've been labouring ... and it's a good example of why it would've been a good idea to have obtained professional advice *before* VAT registration.

But it's never too late, so I'd suggest you make that a high priority next week - and note Jason's comment regarding HMRC reviewing your first VAT return (there's no time to lose)!

Thanks (5)
By lionofludesch
03rd Mar 2024 11:01


Thanks (1)