VAT Registration for Customs clearance business

Client who makes 150k a year has not VAT registered as she has said customs agents do not need to

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Hi all,

I have a client who is a customs clearance business (she only transports the goods from customs to businesses in the UK and doesn't warehouse or store these goods), she's told me that due to this nature of business she has been told by other accountants and others who work in the industry that she dosent need to VAT register. I'm struggling to find any articles which back up her claim. Does anyone have any experience with this matter or any HMRC articles to help?

Thnak you in advance.

Replies (4)

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By Paul Crowley
03rd Apr 2024 13:44

I registered a client four years ago, retrospectively for four years. Reverse of your issue. The company exported the services.
Apparently he had been told that he was not allowed to register (so could not reclaim VAT). Yes he was able so to do, but we could only go back 4 years. The client wasted a complete year thinking that I was probably wrong because his prior firm was an awful lot bigger. The VAT refunds now by far exceed fees, tenfold. The 4 year back track was a significant windfall.

Do not trust other people's opinion. She may have asked when turnover was £70,000. But hopefully there is some basis for her belief

Start point is what is being supplied to whom?
Does it qualify as a service being exported? If so then to which countries?

Edit. Searched on google keywords.
No idea if it is correct. Zero rating if correct means she could choose to register and get back all input VAT for for four years.

This answer gives a link
Note 9

Thanks (1)
Routemaster image
By tom123
03rd Apr 2024 13:53

So basically UK road haulage then?

Thanks (2)
Replying to tom123:
By Jason Croke
03rd Apr 2024 15:53

tom123 wrote:

So basically UK road haulage then?

That's how I read it too.

Fancy language re. customs etc but sounds like they clear the goods at border and deliver them, so more sounds like a UK freight business.

Would think the answers lay somewhere in the below guidance - section 4 onwards - depending on the contractual nature (ie, who is the customer) but it is entirely possible the supplies are zero rated...but zero rate is still a rate of VAT and triggers a VAT registration - or else can apply for exception from registration if the client does not want to reclaim any input tax nor have hassle of VAT returns.

But then if the sales are zero rated, why wouldn't you register for VAT and reclaim all your lovely input tax on diesel, repairs, staff hire, tyres, etc. By registering, client could reclaim input tax which then improves cashflow and also profit.

Any client who tells me they've been advised by others in their sector that the VAT is x or y - shudder - the competitors might be right or might be right for their circumstances but not for yours....typical example is a sole trader teacher and a Ltd teacher, one is exempt and one is standard rated but both doing exactly the same thing, so taking advice that all sales are exempt from a sole trader teacher is only correct if you are a sole trader teacher also and also teaching similar subjects, pole dancing is not an exempt supply, tap dancing is.

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Replying to Jason Croke:
By FactChecker
03rd Apr 2024 18:06

Best final 10 words of a post that I've read in a while! :=)

That's in terms of amusement rather than pure enlightenment, but there was plenty of the latter in the previous paras that I hope OP absorbs fully.

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