Anyone understand VAT?
 

Keeping it brief.. I have someone in a workshop next to mine that is prepared to do me a favour and get me some tools on an account at trade price, theory being he will get the VAT. But as far as I understand he won't actually keep the VAT.. it gets passed on through him?

Re: Anyone understand VAT?
 

Sounds like he will buy the tools and reclaim the VAT on purchase. All good. He will sell the tools to you unofficially and not charge you VAT for them. Not good, this constitutes VAT fraud.

It's the only way I can see that 'he gets the VAT' but I have not dealt with VAT for some time.

Re: Anyone understand VAT?
 

He's not selling unofficially to me as I will have a receipt as I need it for my business. As far as I know he doesn't pay the VAT at source as he's VAT registered buying from a VAT registered distributor. Or does he pay VAT up front to reclaim?

I don't think he'll actually see anything out of it?

Re: Anyone understand VAT?
 

We won't keep the VAT. He'll have to pay it but will get it back. He's not gaining anything out of it.

Unless he's flat rate VAT and the tools are over £2k total...in which case he'll get to keep some of it.

Re: Anyone understand VAT?
 

When I buy from places online for motorbike and cycling stuff or electronics / DVDs from companies that don't pay VAT due to where they're based, eg. Chain Reaction Cycles or Sports Bike Shop or Play.com how does that differ and not become VAT fraud? Or is it the same thing but just a matter of how it's done and called something else?

Re: Anyone understand VAT?
 

Cheers, that's what I understood. I think he's misunderstood the situation.

Re: Anyone understand VAT?
 

Ah right. If he's selling to you officially and he's VAT registered he has to charge VAT to you also.

As far as I can tell all he's doing is getting you the trade rate. I think he's just complicated things for you by mentioning VAT.

Re: Anyone understand VAT?
 

That's what I was wondering. If he has to add VAT as well as paying it getting it in then the price goes over what they're available for online. If I had the trade account myself it would also mean I'd be paying more to get it from the distibutor than online. Really don't understand how online places are selling items cheaper than trade.

Re: Anyone understand VAT?
 

Trade shops still make a profit from trade prices. The online shops are just willing to take that margin too.

Re: Anyone understand VAT?
 

If you pay vat as a business, you have to charge it too.
If I was you, get you're own tools, put them through your business as you would anything else, if you pay a little more, it just comes off your earnings anyway so you'll pay 20% less on the difference if that makes sense?