VAT rate and internet selling

J

jwlf

Guest
Hello all, first post here. I'm currently investigating the feasibility of setting up a business selling directly to customers over the internet. My market would primarily be Ireland and the UK, but I find myself at a distinct disadvantage against UK based retailers because of their much lower VAT. I've looked up the rules for distance selling (as summarised http://www.tmf-vat.com/vat/e-retailing-vat.html (here) ) and I see that after a certain threshold I would be required to charge UK VAT. My question is would I be able to choose to charge UK rather than Irish VAT to my UK customers prior to this threshold?
 
I do business with people via the internet to destinations all over the world, and we avail of "4th schedule" payments, which are vat exempt. The rule is that if the product/service is delivered via the internet then vat doesn't apply. This is even true of the UK. Our only customers in Ireland pay VAT.

Maybe there's an accountant on this forum who can elaborate on this mechanism.

If you need any more info, let me know because I have vast experience in doing business over the internet.
 
Thanks for your reply Davey, but I should have looked a little harder before posing the question, the answer is here on the revenue website:

An Irish supplier who makes distance sales to customers in other Member States who are not registered for VAT, is liable to Irish VAT on such sales until the value of the sales reaches the threshold applying in that other Member State. Once the value of the supplier’s sales exceeds the threshold in the other Member State, the supplier is obliged to register in that Member State and account for VAT at the rates applicable there. If the appropriate threshold is not exceeded, the supplier may, nevertheless, opt to account for VAT in the Member State to which the distance sales are made.

It should be noted that a supplier who is engaged in distance sales to several Member States is required to register in each Member State in which the value of the distance sales exceeds the appropriate threshold.
Click to expand...

Which is great news. As I'm planning on shipping a physical product, I'm not eligible for the fourth schedule, unfortunately. Wish I were though!
 
Ugh - sounds kind of nasty. I thought 4th schedule applied to physical items too. Our services don't involve any kind of physical product so we're still fine. Sounds a little like a quagmire if you ask me. I regularly purchase items in the UK and I don't appear to pay any VAT to be honest... maybe I'm wrong.

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The full name of the 4th Schedule scheme is "4th Schedule Services" and hence this refers to services only and not goods. A full list of what is covered under 4th Schedule Services can be found here:

[broken link removed]

DaveyByrne - you are probably not being charged any VAT on your UK purchases, because you are (I assume) VAT registered in Ireland and are purchasing either goods or 4th Schedule Services from UK VAT registered businesses. When this occurs, it is correct that no VAT is charged.

If the OP is selling to non VAT registered persons, he is required to charge VAT. However, as he has already noted, he can choose to register for UK VAT and account for VAT at the UK rates.

Hope that might help to clear up any confusion.
 
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