VAT query on buying goods in UK

droidus

Just wondering if anyone could help me with this.

I run a small record label, our distributor recently went bust leaving unpaid manufacturing fees at the pressing plant for our next release.

Ive arranged to pay the costs and have the material sent to our new distributor so that they can continue the manufacturing process. They are also based in the UK. I pointed out that we are an Irish company and are therefore not liable to pay UK VAT. They initially agreed to this. However, they are now saying that since the goods are not for export that we have to pay the VAT. I understand that this could apply in this case, but the goods are the first stage of the manufacturing process, these will be sent to the new distributors who will complete the process and the final product will then be exported.

Are they correct, and if so, are there any exceptions which could apply in this case?

mari2222

Exporting goods to Ireland

The following I sourced online from a blog at www.brighton-accountants.com - hope they wont mind my copying it here:



A UK VAT-registered business does not need to charge VAT on goods exported to Ireland, provided it obtains the customer’s Irish VAT registration number (including the IE prefix) and shows it on the invoice. It must also keep documentary proof of export.



The UK business is still able to reclaim any UK VAT on the goods which it is exporting, subject to the normal rules about reclaiming input VAT.
If the Irish customer is not registered for Irish VAT, and the UK business is not registered for Irish VAT, then UK VAT must be charged. No VAT is chargeable on goods which would normally be zero-rated or exempt when supplied in the UK (for example, books, children’s clothing and some food items).
Every year the UK business should check whether its level of sales to unregistered customers in Ireland requires it to register for Irish VAT under the distance selling rules. Broadly, these require a UK business to register for Irish VAT, and then charge that instead of UK VAT, if its sales of goods to customers in Ireland who are not registered for Irish VAT are over €35,000 in a calendar year. Such a registration is also optional at lower levels of sales, but as rates of Irish VAT on most goods have recently increased from 21% to 21.5%, which is typically higher than the UK VAT equivalent, this is unlikely to be favourable.

Mr. Incognito

There are two issues here.

Firstly whether you pay UK VAT.

This depends if you are VAT registered or not. If not you pay UK VAT and that's it.

If you are you provide them with your VAT number and they will not charge VAT.

VAT is not solely an Irish tax, it is a european tax.

Secondly, where goods are manufactured for export no VAT will apply to the manufacturer on the exports where they are sent outside the EU.

However, as you are paying someone to manufacture the product this is not the case

There is a relief known as Inward Processing relief where raw product is imported, processed and subsequently exported. This might apply depend on the circumstances.

This is all general and non specific as I don't know the exact facts and I'm going to leave it at that and lock it becuase someone will stroll along and say DEFO XYZ and Boards will be liable for said clown.

So read the Guide to VAT in the stickies and iron it out with the manufacturer as appropriate.