Our potential new client based in Germany wishes to import their products into the UK to be held in a warehouse until sold to UK traders and also via online retail. HMRC keeps pointing us towards form VAT1TR Distance Selling, however distance selling occurs when a "business supplies and delivers goods from one EU country supplies and delivers goods to a customer in another EU country who is not registered for VAT". If our new client is selling to UK traders who are VAT registered is this necessarily distance selling or is another VAT form required?
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Two immediate concerns:
- the UK warehouse constitutes a business establishment, triggering the liability to register in the UK;
- Check the wording of the VAT1TR. You do not want to become liable for a client’s VAT debts!
If all B2C supplies are from the UK warehouse, it's not distance selling.
The Germany entity needs to 'sell' from its German registration to its UK one - so has to do all of the reverse charge etc for acquisition accounting. It's then just a normal standard-rated sale from the UK registration to UK customers.
As Les point out, the UK warehousing probably creates a permanent establishment in the UK, which means you need to think about transfer pricing between Germany and UK. This can be done as separate exercise for tax purposes. Germans are used to having parallel tax book-keeping to reflect different accounting rules for tax purposes.