"This item has no VAT charge that's why its cheaper"
"This item has no VAT charge that's why its cheaper"
Author
Discussion

MitchT

Original Poster:

17,152 posts

239 months

Thursday 24th September 2015
quotequote all
I'm fancying a new MacBook Pro. A seller on Amazon has the best model for £400 less than the price on the Apple store. In the Q&A section someone has asked "How is this model £400 cheaper than exactly the same model on Apple Store?". The seller has answered "This item has no VAT charge that's why its cheaper". So, what happens about the VAT? Is this legal? If I buy this item will I have to pay the VAT myself? What's going on?

Simpo Two

92,928 posts

295 months

Thursday 24th September 2015
quotequote all
Grey import? Nicked?

TheEnd

15,370 posts

218 months

Friday 25th September 2015
quotequote all
Is there some school/student scheme?

and another point, if HMRC decide that VAT should be paid, would they go after the seller or the buyer?

MitchT

Original Poster:

17,152 posts

239 months

Friday 25th September 2015
quotequote all
I remember once seeing a seller on eBay shifting Apple gear with similar discounts. There were literally thousands of positive feedback so they’d clearly been trading for a good while with no issues. It would be useful to save £400 on a new MacBook Pro but I want to make sure I don’t end up with an unexpected tax bill or some other, more serious, penalty for participating in a tax dodge.

OscarIndia

1,216 posts

202 months

Friday 25th September 2015
quotequote all
Surely it is the seller who is responsible for the VAT.
When they buy their stock in They pay VAT to their supplier, who then passes it on to the revenue.
They are then responsible for adding the VAT to the product and charging that to the end customer.
If they don't then they are the ones the Revenue will chase.
In this case it sounds dodgy, but they are ultimately the ones who will get clobbered if the Revenue catches up with them.

Simpo Two

92,928 posts

295 months

Friday 25th September 2015
quotequote all
OscarIndia said:
Surely it is the seller who is responsible for the VAT.
That's my view too. If HMRC chase them for VAT then they will have to pay it out of what they charged you, not send you another bill.

Super Slo Mo

5,374 posts

228 months

Friday 25th September 2015
quotequote all
Where is the seller based? If it's outside of Europe they won't have to charge you vat.

However, you will have to pay the vat when the item clears customs. You'll also get hit with a handling charge of up to around £10-12.

If the seller is uk based, it's dodgy.

jbswagger

965 posts

231 months

Friday 25th September 2015
quotequote all
Could the sellers turnover be below the VAT threshold, and thus not registered for VAT?

Obviously the seller cannot claim back they VAT they pay their supplier.

ATG

23,811 posts

302 months

Friday 25th September 2015
quotequote all
Super slo mo is on the money.

Jockman

18,414 posts

190 months

Friday 25th September 2015
quotequote all
TheEnd said:
Is there some school/student scheme?
Yes. There is.

MitchT

Original Poster:

17,152 posts

239 months

Friday 25th September 2015
quotequote all
Seller is in the UK. Seller info says they're not VAT registered so could that be the reason?

TheEnd

15,370 posts

218 months

Friday 25th September 2015
quotequote all
If they are below the threshold, they don't need to be VAT registered, but that also means they should be paying the VAT to their supplier.

It could be possible they are buying from someone at VAT free prices, but somewhere along the line, HMRC is going to be wanting a cut. The idea is you should only be able to buy at the core price without VAT if you are VAT registered.

MitchT

Original Poster:

17,152 posts

239 months

Friday 25th September 2015
quotequote all
So someone has made the assumption that they don't have to charge VAT or pay VAT on items they sell if they are not VAT registered ... and is going to come unstuck with it at some point.

TheEnd

15,370 posts

218 months

Friday 25th September 2015
quotequote all
Yep, the VAT threshold for mandatory registration is £82k turnover.
If you are below that, it's optional.

If you are VAT registered, you can buy stuff from companies without the VAT being already added on. You'll see a lot of trade materials places selling stuff which advertise the ex VAT rate.

EricMC or some other accountants would know better, but I was under the impression the supplier should be taking records of where their goods are going with a VAT number.

HMRC would go to the supplier, see that they have sold £100k of computers and say that should mean they are owed £20k VAT.
The supplier would then say those goods have been passed down the line to X, Y, and Z, and they'll pay the VAT on the next sale price, which isn't bad for HMRC as each step in the line would mean the additional profits and higher sales prices, and higher VAT, but it shouldn't just be disappearing off the radar.

I would imagine HMRC if they want to investigate would start going down the line finding the point where the first sale was made to someone non VAT registered and that's where they would charge it.

Either way, I don't believe there is any legitimate way to shuffle goods around and avoid paying VAT.


I'm below the VAT threshold, so no VAT is charged on anything I sell or do but that's because I've already paid it on any materials and bits already.

If the guy is getting stuff without the VAT paid, either he's given a dodgy VAT number to the supplier, or the supplier hasn't been paying attention and will probably send a letter at the end of the tax year saying "Hey, we forgot to get your VAT number, can you let us know", and then things will get tricky.

Super Slo Mo

5,374 posts

228 months

Friday 25th September 2015
quotequote all
Every B2B transaction I make has VAT added, you simply cannot buy products or services from a legitimate supplier without the VAT added unless there's a specific exemption for that product or service.

As a VAT registered entity, we then claim that VAT back, or rather, we offset it against the amount we owe the tax man from goods and services we've supplied.

I should add that it's possible for us to supply EU customers outside of the U.K. without VAT added, provided that customer supplies their EU vat number.

On another note, Apple are notorious for not giving much margin in their products for resellers, I'd be amazed if it's possible for anyone legitimate to be able to sell on Amazon and make money once Amazon have taken their cut.

TheEnd

15,370 posts

218 months

Friday 25th September 2015
quotequote all
Super Slo Mo said:
Every B2B transaction I make has VAT added, you simply cannot buy products or services from a legitimate supplier without the VAT added unless there's a specific exemption for that product or service.

As a VAT registered entity, we then claim that VAT back, or rather, we offset it against the amount we owe the tax man from goods and services we've supplied.
Gotcha.
Obviously not being in the VAT loop, I didn't know how it works. So generally it should be inescapable.

Super Slo Mo

5,374 posts

228 months

Friday 25th September 2015
quotequote all
In a nutshell yes. It's simpler from a supply point of view anyway, everyone gets charged vat then it's up to each individual or company to reclaim it if they're able.
It means the supplier isn't responsible for checking the legitimacy of each customer's vat status.

Mgd_uk

412 posts

134 months

Friday 25th September 2015
quotequote all
they could also be making use of the apple student discount and flogging on at a small profit.

essayer

10,410 posts

224 months

Friday 25th September 2015
quotequote all
MitchT said:
Seller is in the UK. Seller info says they're not VAT registered so could that be the reason?
If they are not VAT registered then who has paid the VAT - either when they bought it from their UK/away wholesaler or when they imported it from outside the EU..

Super Slo Mo

5,374 posts

228 months

Friday 25th September 2015
quotequote all
essayer said:
MitchT said:
Seller is in the UK. Seller info says they're not VAT registered so could that be the reason?
If they are not VAT registered then who has paid the VAT - either when they bought it from their UK/away wholesaler or when they imported it from outside the EU..
They will have paid vat when they purchased it, they just can't reclaim it or legitimately charge it on to the next buyer.

Op, do you have a link to the product in question?