Charged vAT for a zero-VAT rated purchase

jman0war

Here's the story.
I am buying a food stuff for a niche market.

There is a big corporation in USA that manufacturers this stuff.
I rang them and they gave me the number of their Irish distributer.

I bought 1 item from them at rip-off prices.
The item costs 32$ in USA
Same item sold to us for 87€ (112$) by the irish distributer.
It was 70 something euro, plus VAT, bringing the total to 87euro

Later I found out that this is a zero-vat rated item.

I was thinking of writing a letter of complaint to the manufacturer in USA, complaining about the rip-off prices their irish distributer charged us.

Should I also contact Revenue about being charged VAT for a zero-VAT rated item?
Or are their circumstances whereby a seller can charge VAT anyway?

Ronan H

Firstly, writing to the USA supplier to complain about the prices that the Irish vendor is selling them at, is probably not going to do anything except make you feel a bit better. Once the guys in the USA flog their food, they probably don't care what happens to it afterwards...but I'm open to correction on that!

Secondly, it may have been a mistake that you were charged VAT. Have you tried going back to the shop to explain that you were charged VAT for a non VAT item? They might just sort it out there and then if it's a genuine mistake. If you have no luck with that, then you might need to take further action, but going back to the shop would be my first step anyway...

On your question, I don't know if there are circumstances where VAT may be charged on a non VAT item...

whippet

I may be incorrect here but i'd imagine that imported goods 'which can't be gotten here' couldn't be VAT exempt? I am very sure the distributor had to pay import duty and VAT when bringing them in.

So before you accuse the disty of shady practice I would check a few facts first.

What would the distributors costs be on top of what they paid the US company:

- customs duties
- shipping
- importer's fees
- premium for small orders
- etc .. etc ...

jman0war

whippet wrote: »

I may be incorrect here but i'd imagine that imported goods 'which can't be gotten here' couldn't be VAT exempt? I am very sure the distributor had to pay import duty and VAT when bringing them in.

So before you accuse the disty of shady practice I would check a few facts first.

I found out by comparision shopping.
I contacted the USA company and they gave me the number for their UK distributer. It was they that told me it's zero vat rated.

What would the distributors costs be on top of what they paid the US company:

- customs duties
- shipping
- importer's fees
- premium for small orders
- etc .. etc ...

The UK distributer is charging 35£ (43.5€) for the same item.
Plus 64£ shpping no matter what quantity i order.
So if I buy a large amount it's worth it.

I don't know how much the Irish distributer charges for shipping as I arranged my own collection from their warehouse. But I'm pretty confident it would be a lot.

Kristopherus

Why are you coming on here to a public forum when your first call should be to the accounts dept of the Irish distributor?:(

jman0war

Kristopherus wrote: »

Why are you coming on here to a public forum when your first call should be to the accounts dept of the Irish distributor?:(

Because the thread i'm choosing to post in, is called "Rip Off Ireland" and I have an experience that counts.

Kristopherus

jman0war wrote: »

Because the thread i'm choosing to post in, is called "Rip Off Ireland" and I have an experience that counts.

Good god, if thats the way you are going to operate, you wont last long. You have an experience you THINK counts. You should talk to the Distributor first, though, just to clarify everything.

28064212

jman0war wrote: »

I found out by comparision shopping.
I contacted the USA company and they gave me the number for their UK distributer. It was they that told me it's zero vat rated.

Have you checked that the item is zero vat rated in Ireland?

foggy_lad

Most foodstuffs classed as luxury items incur the highest rate of VAT.

sandin

foggy_lad wrote: »

Most foodstuffs classed as luxury items incur the highest rate of VAT.

There's no such thing as a "luxury" item. 23% is the standard vat rate. Certain basic foodstuffs have a zero vat rating.

The op sounds very inexperienced, - UK vat and Irish vat are different. Irish distributor probably has volume discounts and charged you a "retail" price. In business you need to negotiate.

davo10

Op if you import and sell the foodstuff without knowing the exact vat situation, this is a very naive way of doing business, you yourself may get a nasty shock if revenue /customs come after you in the future and pleading ignorance is unlikely to carry much weight with them.

What type of foodstuff are you talking about op?

fatboypee

Kristopherus wrote:

Why are you coming on here to a public forum when your first call should be to the accounts dept of the Irish distributor?

......

Kristopherus wrote: »

Good god, if thats the way you are going to operate, you wont last long. You have an experience you THINK counts. You should talk to the Distributor first, though, just to clarify everything.

I think the more pertinent question ought to be why did you post anything if all you are doing is disparaging the original post ? If the OP wishes to ask a question on a 'public' forum surely by definition that it is 'public' they are entitled to do so. Just as you are entitled to get upon a high horse and savage the original poster, adding no value and for no apparent reason other to inflate your own ego.

Oryx

1. Have Irish Revenue confirmed to you this item is zero rated?
2. Have you contacted your distributor to rectify the vat error?

Those two things are the fundamental issues here. What happens in America or the UK is irrelevant. Your problem with the vat may be a mistake, but you havent checked, youve come straight here calling rip off. Now the price is more expensive here from what you say, but what you dont mention is whether you asked what a bulk discount would be. Your comment that you are 'confident' that their carriage would be a lot, shows you just want to give out about this crowd, without checking first.

jman0war

Rang Revenue.
They confirmed insofar as they are concerned it's a zero vat rated item

beanie10

If you are registered for vat in Republic you do not pay vat on purchases in NI ,UK or Europe.

No such thing as zero rated vat unless, I think, if its a charity.

sandin

jman0war wrote: »

Rang Revenue.
They confirmed insofar as they are concerned it's a zero vat rated item

Revenue will never confirm anything over the phone. They will give you an indication, but you would need to send a sample down to them and they would send you back a confirmation of the vat rate.

If its a zero rated food stuff, then the distributor in Ireland would know and it become a selling point for them.

davo10

Op there is one point which seems obvious to me, why are you upset a rival is charging vat if you are not going to?. If I were you I would be delighted with this situation, you will be undercutting a competitor by selling vat-less therefore at a better price. And by the way, is it your intention to make some kind of a profit?

rubadub

sandin wrote: »

There's no such thing as a "luxury" item.

Its just a colloquial term. Chocolate biscuits are 23% VAT, non chocolate coated are 0%, at the time this changed the media was often talking of "luxury items"

Remarks:

(1) It should be noted that biscuiits wholly or partly covered or decorated with chocolate or some other product similar in taste and appearance are liable at the Standard rate. (2) However, the Zero rate applies to certain baby biscuits (liga etc.) (3) Value of moisture content for a biscuit is up to 12% per State Chemist. Over that value products are considered cakes.

The moisture is interesting, jaffa cakes went to court and proved they were cakes in the uk. Their argument was cakes went hard when stale, and biscuits went soft.

jman0war wrote: »

Rang Revenue.
They confirmed insofar as they are concerned it's a zero vat rated item

What is the item? some are a grey area, such as whey sports supplements, there was lots of discussion about this in other threads. Seemingly if you have a picture of a big bicep on the tub its 23%, if its a picture of a cake 0%...:rolleyes: Glucose would be similar.

jman0war

rubadub wrote: »

What is the item? some are a grey area, such as whey sports supplements, there was lots of discussion about this in other threads. Seemingly if you have a picture of a big bicep on the tub its 23%, if its a picture of a cake 0%...:rolleyes: Glucose would be similar.

In fairness the lady from Revenue I spoke with said it's possible there is an ingredient included that requires VAT, but she made the point, at what rate of VAT?
I was charged 23%.
So she said I should contact them and ask them to provide a letter or proof from Revenue that the product is liable for VAT, and at what Rate.
What if they ignore my request, i asked?
She said to come back to Revenue and lodge a complaint and they will see it through.
So tomorrow i might word up an email or ring them if I get the time.

sandin

jman0war wrote: »

In fairness the lady from Revenue I spoke with said it's possible there is an ingredient included that requires VAT, but she made the point, at what rate of VAT?
I was charged 23%.
So she said I should contact them and ask them to provide a letter or proof from Revenue that the product is liable for VAT, and at what Rate.
What if they ignore my request, i asked?
She said to come back to Revenue and lodge a complaint and they will see it through.
So tomorrow i might word up an email or ring them if I get the time.

One product I sell is 0% vat and some stores charge 23% vat on it. Its a specific product, so there's no ifs/buts and means I am selling at 20% below some other stores - boy I push it as a 0% vat product can be seen a brilliant value.

Therefore I would guess the importer will probably give you a sh1tload of free stock if you can bring their retail prices down by approx. 20%

So, be careful how you approach it - look at it as you doing them a huge favour an if its re-rated at 0% ask them for a little reward.

rubadub

What's with all the secrecy, why aren't people saying what these products are?

ResearchWill

beanie10 wrote: »

If you are registered for vat in Republic you do not pay vat on purchases in NI ,UK or Europe.

No such thing as zero rated vat unless, I think, if its a charity.

Lots of things are zero rated for VAT purposes.

0% (Zero) VAT rating includes all exports, tea, coffee, milk, bread, books, children’s clothes and shoes, oral medicine for humans and animals, vegetable seeds and fruit trees, fertilisers, large animal feed, disability aids such as wheelchairs, crutches and hearing aids.

jman0war

rubadub wrote: »

What's with all the secrecy, why aren't people saying what these products are?

Being the case that there is but one distributer in Ireland, it wouldn't take much for some troll here to be-moan and accuse me of libel.

jman0war

LOL!
I literally just checked my email and after i sent them an email this morning, the irish distributer has replied and said they "made a mistake" and will refund the VAT immediately.

Call me a cynic but you'd have to wonder how many other "mistakes" they've made on the same product...

Oryx

jman0war wrote: »

LOL!
I literally just checked my email and after i sent them an email this morning, the irish distributer has replied and said they "made a mistake" and will refund the VAT immediately.

Call me a cynic but you'd have to wonder how many other "mistakes" they've made on the same product...

And this is why you need to worry about libel. Cant you accept it might have been a genuine mistake?

sandin

jman0war wrote: »

LOL!
I literally just checked my email and after i sent them an email this morning, the irish distributer has replied and said they "made a mistake" and will refund the VAT immediately.

Call me a cynic but you'd have to wonder how many other "mistakes" they've made on the same product...

But they don't gain on vat - only revenue gain. So probably was an error as most of the items they sell probably have vat and possibly the person you dealt with initially did not realise it..

jman0war

sandin wrote: »

But they don't gain on vat - only revenue gain. So probably was an error as most of the items they sell probably have vat and possibly the person you dealt with initially did not realise it..

Only if they are forwarding the VAT collected to Revenue.

Revenue is just another government dept of civil servants, i see no reason to believe they haven't been asleep at the wheel the last 20 years like the rest of their compatriots in the civil serivce.

sandin

jman0war wrote: »

Only if they are forwarding the VAT collected to Revenue.

Revenue is just another government dept of civil servants, i see no reason to believe they haven't been asleep at the wheel the last 20 years like the rest of their compatriots in the civil serivce.

belive me, the ONLY gov dept that's awake is revenue and they carry out tens of thousands of audits every year and they can be very very thorough on their investigation if they evn sniff something wrong - and if their accountant signed off on the accounts knowing things were not right, he/she is in deep sh1t too.

No - revenue is the one dept I would ensure all docs are up to date and properly organised.

jman0war

sandin wrote: »

belive me, the ONLY gov dept that's awake is revenue and they carry out tens of thousands of audits every year and they can be very very thorough on their investigation if they evn sniff something wrong - and if their accountant signed off on the accounts knowing things were not right, he/she is in deep sh1t too.

No - revenue is the one dept I would ensure all docs are up to date and properly organised.

Being the case that you've already posted things that I found were not true (that Revenue will never confirm anything over the phone). I find no particular reason to believe your statement regarding Revenue carrying out "tens of thousands" of audits a year.

sandin

jman0war wrote: »

Being the case that you've already posted things that I found were not true (that Revenue will never confirm anything over the phone). I find no particular reason to believe your statement regarding Revenue carrying out "tens of thousands" of audits a year.

Can you show me where revenue "confirmed" the vat rate on the phone. They gave you an indication and their opinion, but they also said that without knowing all the ingredients they could not give you a definitive answer.

Revpenue will not give a definitive answer on a vat rate on the phone. FACT.

As for report on audits - read the revenue annual report on revenue.ie - it even gives z breakdown of audits per business sector.

paul71

jman0war wrote: »

Being the case that you've already posted things that I found were not true (that Revenue will never confirm anything over the phone). I find no particular reason to believe your statement regarding Revenue carrying out "tens of thousands" of audits a year.

You dont need to beleive the poster, check the revenues website. They conduct in excess of 30,000 audits every year, the results of settlements in excess of €20,000 are published in all national newspapers every quarter. You can be certain that the Irish Revenue are a modal of efficiency and are indeed the envy of many other countries.