Advice on tax ni and vat

[DaveDuffy121]

Hi,

I,m a self employed book reseller or what is known as a BOOK MAN, I require advice on whether i can set up an offshore company as i do not actually purchase any stock i respond to my customers order and most of my stock comes from abroad.I ,m told this is Sale or return. I would also like advice on reclaiming the VAT since most of my sales are Vatable which i collect and at the moment pass on to the wholesalers, However if i was VAT registered i could claim some of this back ( i gather its an admin nightmare but is it possible if i base my company off shore? }

 

NI contributions is another area where i have gaps in my knowledge, AS a single parent the inland revenue in their wisdom have classed me as a HOME MAKER and as such i should not have to pay any N I contributions to insure i get a Basic state pension until my children become 16 years of age. HOWEVER last year on my self employed returns which i do on line my earnings were above a certain level that i had to pay around £300 pounds NI or they were going to fine me.IS there any way of finding out what my obligations are regarding N I for working single MALE PARENTS who are classed as HOMEMAKERS by the INLAND REVENUE without getting confused by some faceless bureaucrat who specialises in talking in circles and only does the job for the pension when they retire ie most of the civil service

[ericsbrother]

I can offer an answer to the last bit, if you are not earning money and are looking after your children then you get your NI paid. The same goes if you work and earn below a certain threshold (though not self employed). once your earnings are above a certain threshold as a self-employed person you pay class 2 or class 4 NI and this is what you undoubtedly have been asked for. Your classification of homemaker has now gone out of the window and will not return as long as you are self employed regardless of the level of income.

For the other bits-books are not vatable in the UK but are in many EU countries so you may have been charged when none is due. You would need to make further enquiries unless someone else pops up who has experience in this.

[caro]

I take it you get child benefit rather than state pension. How do you think this would be funded if all companies went off-shore to avoid paying contributions?

 

I think you'd need to register for VAT to claim it back on the books.

 

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

 

https://www.gov.uk/vat-registration/when-to-register

[topcat1802]

Only register for VAT if your annual earnings are above the VAT threshold, or you are likely to exceed the current VAT threshold in the current quarter. Once you start paying/claiming VAT it can be a bit of a minefield so you should only register if you need to. When I first started self employed I registered for VAT, about 2 years down the line I had a VAT audit from HMRC, and the VAT inspector after gong through my earnings asked me why I had registered, and suggested that in deregister as I was unlikely to exceed the VAT threshold for the foreseeable future. So that's precisely what I did, and I never re-registered, it was so much easier not having to go through all my VAT receipts every quarter and file the VAT return, and then having to send off money for the VAT - you don't get paid for collecting VAT, but once you register you have to pay VAT. Since you are trading within and external to the EU you will also need to prepare intrastate reports as well - very complicated to do so stay way from VAT unless you have to!

[kregrs]

Only register for VAT if your annual earnings are above the VAT threshold, or you are likely to exceed the current VAT threshold in the current quarter. Once you start paying/claiming VAT it can be a bit of a minefield so you should only register if you need to. When I first started self employed I registered for VAT, about 2 years down the line I had a VAT audit from HMRC, and the VAT inspector after gong through my earnings asked me why I had registered, and suggested that in deregister as I was unlikely to exceed the VAT threshold for the foreseeable future. So that's precisely what I did, and I never re-registered, it was so much easier not having to go through all my VAT receipts every quarter and file the VAT return, and then having to send off money for the VAT - you don't get paid for collecting VAT, but once you register you have to pay VAT. Since you are trading within and external to the EU you will also need to prepare intrastate reports as well - very complicated to do so stay way from VAT unless you have to!

 

Sorry but I disagree. I am VAT registered, on a flat rate scheme, collect VAT at the full 20% but only pay an agreed percentage, currently 10%. The only downside to this is I can't reclaim VAT on any purchases. Oh, and my turnover is LESS than the threshold.

[Conniff]

Sounds like you are trying to work the system. I know a coffee shop that does the same.

[ericsbrother]

Many small companies do this as it saves them a great deal of trouble calculating and claiming back VAT on imported stuff. However, difficult to get off the roundabout once you go down this route and you end up paying VAT where you dont need to and that meas you lose a competitive edge where you could sell your goods for less but get a larger net margin

[DaveDuffy121]

Hi and thanks to you all for the advice please keep it coming...its great to try to get as much info on a subject before i make a decision! At present the recommend retail price for my products is set by a wholesaler who i am tied to by a contract.Most of of my Income is now generated by Goods which attract UK mainland VAT which I collect and forward to the wholesaler BUT only at and here,s the confusing bit ( 00.1666) that is I Take my gross sales for vat goods and multiply this amount by a factor of 00.1666 to arrive at an amount that is then classed as NET from which i then take my commission. Some of the distributors are VAT registered so I,m trying to find out what is the best way forward any input from you guys would be appreciated