To VAT or Not to VAT? That is the question

Hi All
I am selling a few items on eBay, but whenever I get to sell a dearer item, it is usually to business to business customer who usually says he won't buy unless he gets a VAT Invoice.
Since I don't really want to get into the VAT thing until the T/O goes over £68.000 I wondered if there is anyway around this. Curious minds need to know.
Bob
Reply to
put_upon
put_upon gurgled happily, sounding much like they were saying:
Simple. You aren't allowed to charge VAT or issue a VAT invoice to any buyer unless you register for VAT - at which point, you have to charge & invoice every buyer, but can reclaim VAT on your purchases.
If he doesn't want to buy from a non-VAT registered seller, that's his lookout, but he really ought to be checking that before bidding on eBay.
Reply to
Adrian

I hope they are enquiring before bidding. If they bid, I would be surprised if Ebay allowed them to back out unless there were reasonable grounds to believe that the seller was or was legally obliged to be registered.
Reply to
David Woolley
"BartC" wrote
Oh dear...........!! As has already been stated by Adrian, that is not allowed unless you are VAT-registered.
"BartC" wrote
Are you actually suggesting it should be Zero-rated for VAT, -OR- that it should be VAT Exempt? [Two different things.]
Reply to
Tim
"BartC" gurgled happily, sounding much like they were saying:
Thank you for such a clear and concise proof of your lack of clue.
Reply to
Adrian

"Sales Invoice ... VAT: exempt from charging VAT as not VAT-registered"
So, OK, not properly a "VAT" invoice. I'd be surprised if the buyer's accounts can't deal with a purchase from a non-VAT-registered (ie. small) business, that sounds discriminatory to me.
No, that the vendor is exempt from charging it.
Reply to
BartC

Of course it's discriminatory. I discriminate in favour of better quality goods and services. So what?
If the vendor is not VAT registered they cannot issue a VAT invoice. What VAT number would they put on the invoice you suggest?
Reply to
PeterSaxton
"BartC" wrote
If it's *not* a VAT Invoice, then what's the point in giving it to them?
The buyer wants a VAT Invoice so they can re-claim (about) 13% of the cost of the item through their VAT Return; what you're suggesting the seller provides would not let them do this, so it would just be a total waste of everyone's time.
"BartC" wrote
Of course they could "deal with" it, but they would then be paying 15% more than if the seller was VAT-Registered, for the same headline price.
The buyer would be better off paying 115 to a VAT-Registered seller (and claiming back 15 VAT) than paying just 105 to the non- -VAT-Registered seller (which would effectively cost them 5 more).
Reply to
Tim

It's the best that can be done. If it's possible for some transactions not to have VAT invoices associated with them, then the buyer's accounts should cope with that. What happens with imports and other sources that do not have VAT applied?
The buyer will be saving 15% of the cost as well, so there's no need to claim back 13% of the total to make up for it. *That* would be (and is) a waste of everyone's time.
(When I was VAT-registered but selling to another EU country, I didn't have to charge VAT, even though the country had it's it own VAT scheme, and presumably they didn't have to claim anything back. Far more sensible.)
On an item costing £100 from them?
On an item costing £105 from them? You're suggesting the smaller company will have higher base prices.
Suppose the VAT-registered company is selling at £105+VAT, and the non-VAT registered one at £100, no VAT due? The buyer will then save £5, and helps the cashflow by some £16, by being more flexible with their purchase options.
Reply to
BartC
"BartC" wrote
But it's not what the buyer wants, so they might as well not bother with that "invoice" at all.
"BartC" wrote
No, they won't - if the buyer needs to bid 115 on ebay to win the auction, then with a VAT-Registered seller, s/he ends up paying 100 for the item. But with a non-VAT-Registered seller, s/he ends up paying 115 for the item. See?
"BartC" wrote
The problem is that the buyer is competing on ebay against other buyers who aren't VAT-Registered, and therefore are happy to pay 115 to either type of seller.
"BartC" wrote
Not a waste of the buyer's time, as s/he then gets that extra "discount".
"BartC" wrote
On an item where the winning ebay bid was 115.
"BartC" wrote
On an item where the winning ebay bid was 105.
"BartC" wrote
Not at all. I'm pointing out that it could actually cost the buyer *more* if they buy on ebay from a non-VR seller, **even if** the winning bid is *less*!!
"BartC" wrote
Are you suggesting that the winning bid on the VAT-Registered seller's ebay auction is likely to be more than 15% higher than the winning bid on the non-VR seller's ebay auction?
Reply to
Tim


No. I'm completely confused now. I didn't know there were special rules for VAT on ebay transactions, other than the final auction price not being known when bidding.
But yes, given the same article from two different sellers at the same (or near) price, the one that's VAT-registered has the potential for a refund of VAT that could make the net cost lower. But there is also the potential for the other seller to have a lower price anyway (I think an intended competitive advantage).
Completely ruling out purchases from non-VAT-registered sellers also rules out those potential lower prices. I'm assuming the VAT status of sellers is known when bidding so that one price can be properly compared with another.
Reply to
BartC
"BartC" gurgled happily, sounding much like they were saying:
There aren't. Why would you think there are?
The situation described above would be the same for any two sellers - fleaBay, web, bricks'n'mortar retail.
There is, but given that fleaBay is a marketplace where most buyers are non-VAT-reg, it's probably not going to happen, since the final price is the only one that's relevant to most potential buyers.
Reply to
Adrian

There's no special rules for VAT on ebay.
Ebay is just like any other purchase and sale.
Who thinks ruling out purchases from non-VAT registered sellers is a sensible option?
Reply to
PeterSaxton

...
Tim's comments about competing ebay auction bids confused the issues for me.
For one, the OP's buyer who insisted on a VAT invoice.
Reply to
BartC
"BartC" wrote.
What bit confuses you?
If they bid 115 with a VAT-Reg seller, they pay them 115 and reclaim 15 input VAT, then it's cost them 100.
But if they bid 115 with a non-VAT-reg seller, they pay them 115 and it's cost them 115.
Reply to
Tim

If you're VAT-registered then you compare VAT-exclusive prices if there is VAT added.
Which of these prices would be cheaper in that case:
£90 (no VAT) (no VAT invoice supplied) £100+VAT (VAT invoice supplied) £110 (no VAT) (no VAT invoice supplied)
Clearly the £90 item. Which price is cheapest when you require a VAT invoice? Only one option and that's £100, but you have to pay £115 and need extra paperwork to eventually get back that £15.
Reply to
BartC

Are you sure it always works like that? I think I've seen ebay offers from VAT registered sellers advising bidders that they are bidding on an ex-VAT basis and that VAT will be added to the amount of the winning bid. This would mean that a VAT-reg buyer who bids £100 would pay £115 and reclaim £15, so it costs them £100, while a non-VAT-reg buyer who bids £100 would pay £115 and that's what it would cost them.
The effect is that in the case of a non-VAT-reg seller, the real cost to a buyer is the same no matter whether the buyer is VAT-reg or not, and is equal to the amount of the bid noted, while in the case of a VAT-reg seller, the real cost to the two kinds of buyer differs, but the bid noted may be inclusive or exclusive of VAT, and it is important for the bidder to be aware of which it is.
Presumably the onus is on the seller to make clear what's what, and in the absence of any mention of VAT, a non-VAT-reg buyer should be entitled to assume that what they bid is what it will cost them (i.e. no VAT will be added), and a VAT-reg buyer should *not* be entitled to assume that the seller is VAT-reg and so should *also* assume that what they bid is what it will cost them (i.e. no VAT can be "subtracted").
Reply to
Ronald Raygun

And if there isn't?
Correct.
No, this is wrong. No buyer ever *requires* a VAT invoice except in order to recover input VAT, which is only possible when both buyer and seller are VAT registered. No buyer can require a VAT invoice from a non-reg seller, because the law of the land forbids the seller from issuing one.
There is nothing to stop a regd buyer from buying from a non-reg seller, but of course any invoice they get will not be a VAT one, and thus any VAT which might be "hidden" in the price will be irrecoverable. The OP's buyer may have *requested* a VAT invoice because they mistakenly assumed the OP to be registered. But that's just too bad. They ought to have checked the seller's VAT status before they bid.
Reply to
Ronald Raygun

BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.