Registering for VAT in the UK - any advice welcome

Drn55

We're an Irish company who sell primarily to small businesses in the UK. Our sales are about 90% to the UK, with the remaining 10% spread between Ireland and Europe. At the moment we're registered for VAT here in Ireland, and charge our UK customers 21% unless they provide a valid VAT number. Most of our UK customers, though businesses, do not have VAT numbers (small businesses - don't meet the minimum requirements, etc.).

We've been trying to work out whether we need to register and pay VAT in the UK for these 90%, but we're having trouble finding anything definitive online. Our yearly sales to the UK are on excess of £100,000.

We'd appreciate any advice on this.

Drn55

If anyone's interested in the answer to this question, we got it answered comprehensively on a UK business forum. Little strange, we thought, that UK accountants would know so much more about taxes that affect Irish businesses than Irish accountants.

http://www.ukbusinessforums.co.uk/forums/showthread.php?t=89043&page=3

The complete lack of knowledge we encountered amongst Irish accountants on this topic led us to the conclusion that a huge number of Irish businesses who should be VAT registered in the UK are not. Distance selling regulations in the EU have changed this whole field, and a lot of Irish businesses who sell to the UK are going to have big problems in the future over not paying VAT at the correct rates and to the correct country.

Citizenpain

DRN
just wondering
Is this paragraph from the Revenues VAT guide correct?

Distance sales out of Ireland

In the case of distance sales made from Ireland the place of supply of such goods is the Member State
where the transport or dispatch ends where the supplier has either exceeded the registration threshold
in the other Member State or has opted to register in that Member State.Where a supplier has not
opted to register for VAT in that Member State the place of supply is Ireland i.e. where the transportation
or dispatch begins.

Example

A VAT-registered Irish trader supplies goods by means of mail-order to a private individual
in the UK. If the seller’s level of trade to private individuals in the UK is below the Distance
Sales threshold of £100,000 as applied in the UK and the trader has not elected to register
for VAT in the UK, the place of supply is the State and, therefore, the trader has an obligation

to account for Irish VAT on the goods.

Bren1609

The treshold is £70,000 in the UK.

Bren1609

Drn55 wrote: »

If anyone's interested in the answer to this question, we got it answered comprehensively on a UK business forum. Little strange, we thought, that UK accountants would know so much more about taxes that affect Irish businesses than Irish accountants.

http://www.ukbusinessforums.co.uk/forums/showthread.php?t=89043&page=3

The complete lack of knowledge we encountered amongst Irish accountants on this topic led us to the conclusion that a huge number of Irish businesses who should be VAT registered in the UK are not. Distance selling regulations in the EU have changed this whole field, and a lot of Irish businesses who sell to the UK are going to have big problems in the future over not paying VAT at the correct rates and to the correct country.

I understand what you mean. This is more of a taxation query, if you ever have any similar queries in the future check out www.askaboutmoney.com there's a taxation forum in there and the advice tends to bit a bit better than on boards.

Drn55

The general gist is: if you have sales over £70,000 to UK customers who are NOT VAT registered, then you MUST register for VAT in the UK, and you must charge these non-VAT registered UK customers the UK rate of 15%. UK customers who are VAT registered fall under the Irish VAT rate, but as they have a valid VAT number, you do not need to charge them VAT.

This means that B2B sales, where all parties are VAT registered, do not go towards the £70,000 threshold. It's a confusing situation, and no one at Revenue here in Ireland had any real knowledge of what to do.

Citizenpain wrote: »

Distance sales out of Ireland

In the case of distance sales made from Ireland the place of supply of such goods is the Member State where the transport or dispatch ends where the supplier has either exceeded the registration threshold in the other Member State or has opted to register in that Member State.Where a supplier has not
opted to register for VAT in that Member State the place of supply is Ireland i.e. where the transportation or dispatch begins.

This is correct, but it's difficult to read - no surprise there. "Where a supplier has not opted to register for VAT in that Member State the place of supply is Ireland i.e. where the transportation or dispatch begins." This only applies when there is an 'option'. When your sales go above the £70,000 threshold, it's NOT an option, it's a requirement.

There is a positive to all this. With the UK VAT rate now 6.5% less than the Irish rate, charging your UK customers the lower VAT rate would allow Irish businesses to knock a large whack off the total cost charged to non VAT registered customers.