What to do with Input VAT on products I resell?

What to do with Input VAT on products I resell abroad - do I take into account Input VAT for pricing

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Over the past couple of week I have been truying to get an answer from HMRC, Great Gov, Export Accademy, as well as my accountant, however I only managed to get a defitive answer from accountnat, but I would like to have a "non partisan" answer too.

While working for a previous company when exporting items the company used to declare the total value the item was sold to the customer outside the UK, but that would have still the inbound VAT the company had to pay included on the declaration. 

An example of the above is:

Item 1, Sold to client X in HK, selling price £3200

In details however Item 1 Gross price was £3000, Net £2500 (VAT £500), and profit of £200 (not including the VAT return ).

However as the market is becoming more and more competitive and I can see how some of the competitors are making offers below UK retail price ( varying on the range between the Net and Gross price of the product) – I wanted to check if there is a process where the pricing of the exported items declared onto the Custom Invoice could be done already deducting the input VAT the company has to pay to source the item.

An Example of the above keeping the £200 profit as per previous example:

Item 1, Sold to client in HK, selling price £2700

In details, Item 1 Gross price of £3000, Net £2500 ( VAT 5£500), and profit of £200.

I do understand however that in this case the company will have to incurred on paying the GROSS price and wait until the VAT return is submitted to receive the input VAT back.

So far my accountant said that I could quote client starting from the NET price as long as the client is oversea, as the item will be zero rated. 

Is this process compliant with HMRC rules?

Replies (7)

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By lionofludesch
24th Apr 2024 18:12

Why don't you trust your accountant?

Thanks (2)
Replying to lionofludesch:
By MV82
24th Apr 2024 20:29

Is not at all the case, but just want to make sure I am following the correct steps, over the last years there as been a stricter controls and investigations from HMRC for company reselling and exporting items.

Thanks (0)
Replying to MV82:
By lionofludesch
24th Apr 2024 21:37

So why aren't you asking your accountant?

Thanks (0)
By Les Howard
24th Apr 2024 18:16

1. Why ask HMRC?
2. I would use net prices to determine my selling price.
3. There are no HMRC-compliant rules in relation to pricing.
4. Talk to your Accountant.

Thanks (4)
By Leywood
24th Apr 2024 19:46

Never ever ever ask HMRC for tax advice.

If you want a second opinion - pay for one.

This forum is not a free tax advice line for business owners

Thanks (1)
By stepurhan
24th Apr 2024 20:31

Why do you want a non-partisan answer?

Subject to keeping within the law, your accountant's job is to find the best answer for you. He is on your side. Do you not want advice from someone that wants the best result for you?

Thanks (2)
By Paul Crowley
24th Apr 2024 22:52

If you are entitled to claim the input VAT then claim it.
Thereafter you decide your own pricing when you made a sale.

Thanks (0)