UK Transit Trade Taxation in UK

[Figocompany]

hi ,

I have started to run company in UK this year. since i couldnt find a decent accountant yet , i was looking for answers for my issue and found here randomly online. I would like to state my problem and i hope someone can help me out with answers , there i go ;


since i establish my company on may of 2018 in UK , i have not registered to VAT yet. this is first important information.

where problem started is : I buy some goods from Turkey and Turkey company delivered goods directly to my client in UK while Turkey company invoice to me and i invoice to end client. this is Transit Trade. I didnt add any VAT on invoice since im not registered to VAT and eventhough i asked , end client said to not add on VAT in invoice which used to clear goods off customs.

But after goods delivered end client says they had to pay VAT and they cant get it back from HMRC with C79 file so they will cut off VAT amount from my invoice amount and pay me less.

question is , how come they cant get VAT they paid from HMRC and cut off my payment? Is this legal? Is this action has grounds? what should i do now?

looking forward to your kind answers

have a good day

 

[Becky]

If they wanted to reclaim the VAT on the goods, they should have bought them direct themselves I'm afraid. As you are not VAT registered you are required to pay VAT on purchases, but you cannot charge it or claim it back. Legally speaking these are two separate transactions, so your client should not try and view it as one transaction via you.

More info here: https://www.gov.uk/guidance/vat-imports-acquisitions-and-purchases-from-abroad

 

[Figocompany]

Hi Becky , thanks for reply ,

to clarify ,

I invoiced to end client without VAT and custom clearance completed from 3rd party ( end client ) in UK with my invoice. How can i pay VAT when i dont do custom clearance myself? and question here is ; end client does custom clearance themselves and get the goods directly to them ( i never see goods ) , VAT occurs at customs , they pay it and they argue that they cant claim that VAT back which they paid. Is this true? hows so ?

Second question , if i was VAT registered , would things be different? hows so ?

I believe since this is Transit Trade , process should be different than usual import