Business in Ireland or UK?

tete123

Hi

Looking for some advice.

Started a business, which on advice from accountant, was told to set up LTD company, VAT registered. My accountant is currently away so cannot find out info from her.

I am thinking of moving over to UK to continue with my business purely for shipping reasons.

Currently (without an account) shipping with Royal Mail is £3.90 (No VAT on RM Prices)
Currently here, I am on a rate of €8.50 (ex VAT) to UK

99% of my business is to the UK.

Obviously I pay VAT on my Sales and subtract the shipping VAT off that total.

Basically I am lost. i turnover €65K, so don't even need to be VAT registered really. (Thinking of closing ltd company and starting up as sole trader in UK)

Say I sell 100 items a week. Should I be saying (When doing calculations)
100x£3.99
100x€8.50
100x€8.550+VAT

From the above shipping rates £3.90 vs €8.50 (ex VAT) - What would be the better option? UK or Ireland? I do understand its a very broad question with lots more to it (Corportation tax in UK etc), but on the shipping front alone.?

Hoping for some general advice (Obviously I will be taking advantage of my accounts advice I am paying for when she returns)

Thanks
Ted

hfallada

Would you move to border county in the Republic? Get the benefits of lower taxation here eg low corporation tax rates. I think new companies maybe corporation tax exempt for a few years. While posting your goods to the UK using Royal Mail.

tete123

Hi,

Thank you for the reply.

Yes I was actually thinking that and it is something I am looking into. But I would to remove the VAT registration then for that option to work I think.

As I would be paying 23% VAT on my sales, but nothing to claim off it (all my stock comes from UK).

Whereas, if I was in the UK - Corporation tax is higher, but I think I can get a Royal Mail (OBA?) account - so a slight reduction on the price, based on volume)

I really do think the VAT Registration was a huge mistake, but I just went on her advice

I calculated it last month (This is where I am confused - should I be using VAT or non VAT Irish price)

So for example:

Last Month:

250 items x €8.50 = €2125 EX VAT
250 items x €10.46 = €2615 INC vat

250 items x £3.90 = £975 (€1350 todays exchange rate - £ very strong)

So as you can see - Postage would be €1350 in the north, or €2125/€2615 (Sorry I do not know which to compare it to)

Its still between €775 - €1265 saving a month

Am I doing that correctly?

Thanks for your help

JMR

Have you considered engaging the services of a UK based fulfillment house?
They store the goods and ship to UK customers when an order comes in.

You need to register for VAT with HMRC as the goods never leave the UK even though you are (presumably) a Ltd Co. registered in Ireland

AndyJB

tete123 wrote: »

Hi,

Thank you for the reply.

Yes I was actually thinking that and it is something I am looking into. But I would to remove the VAT registration then for that option to work I think.

As I would be paying 23% VAT on my sales, but nothing to claim off it (all my stock comes from UK).

Whereas, if I was in the UK - Corporation tax is higher, but I think I can get a Royal Mail (OBA?) account - so a slight reduction on the price, based on volume)

I really do think the VAT Registration was a huge mistake, but I just went on her advice

I calculated it last month (This is where I am confused - should I be using VAT or non VAT Irish price)

So for example:

Last Month:

250 items x €8.50 = €2125 EX VAT
250 items x €10.46 = €2615 INC vat

250 items x £3.90 = £975 (€1350 todays exchange rate - £ very strong)

So as you can see - Postage would be €1350 in the north, or €2125/€2615 (Sorry I do not know which to compare it to)

Its still between €775 - €1265 saving a month

Am I doing that correctly?

Thanks for your help

Hi,
Remember that turnover is not profit. In my view your turnover of €65k is not worth moving to the UK for. Remember the saying “Turnover is for vanity, profit is for sanity!”

On the postage front….

A very quick look at AnPost site gave me this
An Post discounts

Contact them about possible discounts. A previous poster suggested moving to a border county and post from NI for UK rates. Have you spoken to any of the well-known int’l freight companies?

Here’s the Irish rules regards VAT.... Revenue VAT rules

Take a look at section 2. “Thresholds for Registration for VAT”. Sub-section 5 is also interesting as the UK probably have the same type of rule.

As a regular e-shopper for tech items myself, I nearly always pick up the tab for postage. A lot of suppliers offer free post when sales are above a certain value.

What you need to do is review how you’re setting your prices. Maybe build part of the post cost into your margin and apply a flat postage fee for deliveries. I’m open to correction, but from memory postage is VAT exclusive. Not knowing what you’re selling or how heavy shipped items are, in all probability it may be a good thing for you to be VAT reg’ed here. You can claim back Vat on all your other business expenses eg web hosting costs, packaging, phone (mobile/landline) calls/line rental, broadband costs, diesel (not petrol), stationery, printing, pc purchase, accountants fees etc etc. I’m no Tax or accounting expert so speak with your accountant. If you’re not happy with their advice move accountants.

Before you do anything else I’d suggest you sit down with an excel spread sheet and plug in all of your product purchase and sales costs and your various running costs and start looking at what sales prices work for you. When you’re happy with what you’ve come up with then make your decision on what to do next. It’ll also give you a picture of profits or losses.

Best of luck.

jimmii

Postage is only free from VAT when you are buying it from An Post even if you are using An Post for a customer the price you charge the customer should include VAT. Even if you buy bulk labels from An Post you pay VAT on it so it seems to be a very small area that is zero rated. Although I do remember someone posting recently that isn't the case but I can't find anywhere that says so I would be delighted if I was wrong would save me a bit of money!!

OP what weight and size is what you are posting? If your packages are An Post parcel sized (parcels can be pretty big!) you should be paying €4.52 for 1kg, €7.05 for 1.5kg & €9.59 for upto 2kg to the UK might be worth getting on to your local account manager see what they can do for you as 100 a week is pretty significant.

tete123

Hi,

Thank you all for your replies. Really helpful. To be honest, I kind of feel into the business (Tried selling online, took off too quick, to my surprise) did my Start your business course, they told me to get an accountant and she set up ltd company + VAT. Happened very fast.

Ok so to clear up some things.

I currently have a contract with a courier. So VAT + FUEL SURCHARGE is added.

Items I sell are between 0.8KG to 2KG - and vary. The way it is now:

My expenses:

Stock - UK (0% VAT)
Packaging - UK (0% VAT)
Selling Fees - UK (0% VAT)
Marketing - €400/Month (23% VAT)
Postage - €10.86 x 100items = €1086 (23% VAT)
BroadBand - €40/Month (Can't Claim VAT cause UPC Residental, Business more expensive)

---

So for example (and keeping it simple), the way it is now:

I sell: 100 items a month @ €30.00 = €3000 (VAT @ 23% = €690)
I buy from UK 100 widgets @ €10.00 = €1000
Shipping is then: €10.86 x 100 = €1086.00 (Vat @ 23% = €203.07)
Marketing - €400 (Vat @ 23% - €92)

So by using Royal Mail (100 widgets by £3.90 = £3.90 (€520))

My postage is almost half - I then can't claim the €203.07 from my VAT) but I am still better off (I think)

---

Looking at that, I really think I made a huge mistake being VAT registered. I can of course raise my prices, but my sales will fall as my market is hugely competitive and UK. Already I am at a loss as can't offer Next day, Free Returns etc.

Thanks

tete123

JMR wrote: »

Have you considered engaging the services of a UK based fulfillment house?
They store the goods and ship to UK customers when an order comes in.

You need to register for VAT with HMRC as the goods never leave the UK even though you are (presumably) a Ltd Co. registered in Ireland

I did consider that, but I really want to have full control on my stock and my items are large enough, so would take up a lot of space, hence the price would go up

jimmii

tete123 wrote: »

Hi,

Thank you all for your replies. Really helpful. To be honest, I kind of feel into the business (Tried selling online, took off too quick, to my surprise) did my Start your business course, they told me to get an accountant and she set up ltd company + VAT. Happened very fast.

Ok so to clear up some things.

I currently have a contract with a courier. So VAT + FUEL SURCHARGE is added.

Items I sell are between 0.8KG to 2KG - and vary. The way it is now:

My expenses:

Stock - UK (0% VAT)
Packaging - UK (0% VAT)
Selling Fees - UK (0% VAT)
Marketing - €400/Month (23% VAT)
Postage - €10.86 x 100items = €1086 (23% VAT)
BroadBand - €40/Month (Can't Claim VAT cause UPC Residental, Business more expensive)

---

So for example (and keeping it simple), the way it is now:

I sell: 100 items a month @ €30.00 = €3000 (VAT @ 23% = €690)
I buy from UK 100 widgets @ €10.00 = €1000
Shipping is then: €10.86 x 100 = €1086.00 (Vat @ 23% = €203.07)
Marketing - €400 (Vat @ 23% - €92)

So by using Royal Mail (100 widgets by £3.90 = £3.90 (€520))

My postage is almost half - I then can't claim the €203.07 from my VAT) but I am still better off (I think)

---

Looking at that, I really think I made a huge mistake being VAT registered. I can of course raise my prices, but my sales will fall as my market is hugely competitive and UK. Already I am at a loss as can't offer Next day, Free Returns etc.

Thanks

If you didn't register for vat your UK costs would rise considerably as it would no longer be zero rated. It is very tough trying to compete in the UK vs UK sellers while being based in Ireland. You should definitely contact an post to see what they can offer you though at 100/week you should get a significant reduction in their standard rates.

tete123

jimmii wrote: »

If you didn't register for vat your UK costs would rise considerably as it would no longer be zero rated. It is very tough trying to compete in the UK vs UK sellers while being based in Ireland. You should definitely contact an post to see what they can offer you though at 100/week you should get a significant reduction in their standard rates.

Yes - See all I can claim VAT for is:

Phone Bill
Marketing
Courier
Accountant

---

So If I get rid of VAT Registration:

My stock goes up 20% (UK VAT) and I cannot claim my courier VAT back (But this is where Royal Mail comes in) and my phone bill and marketing goes up 23%.

But then I do not have to give any VAT to government, and my prices will stay same, so more profit (I think)

I am going to contact An Post this afternoon. Obviously, I want to stay here as its my home etc.

Ill give them a call anyway. Hopefully my accountant will be back next week. Its keeping me up at night thinking about it and unfortunately, maths/numbers is not a skill I have

JMR

tete123 wrote: »

I did consider that, but I really want to have full control on my stock and my items are large enough, so would take up a lot of space, hence the price would go up

If your products have a large footprint then are you not incurring storage costs currently?
Selling 100 p/week would indicate that you must be...?

Check out these guys http://www.ukpickandpack.com/
We use them for storage and delivery, you might be surprised at the costs associated

jimmii

tete123 wrote: »

Yes - See all I can claim VAT for is:

Phone Bill
Marketing
Courier
Accountant

---

So If I get rid of VAT Registration:

My stock goes up 20% (UK VAT) and I cannot claim my courier VAT back (But this is where Royal Mail comes in) and my phone bill and marketing goes up 23%.

But then I do not have to give any VAT to government, and my prices will stay same, so more profit (I think)

I am going to contact An Post this afternoon. Obviously, I want to stay here as its my home etc.

Ill give them a call anyway. Hopefully my accountant will be back next week. Its keeping me up at night thinking about it and unfortunately, maths/numbers is not a skill I have

Very awkward situation! Hope you're able to figure it all out probably works out quite close best thing to do is probably just live where you are happiest and make the most of what you can with the business!

tete123

No not at all. I have a 4 bed house so I have a Bedroom filled with stock (Just stock no furnature). Usually my stock comes in and 25% goes straight back out that evening. Rest up to the bedroom

But I will have a look at them - it would be great for Returns (i.e UK Address)

Thanks for that.

collegeme

tete123 wrote: »

No not at all. I have a 4 bed house so I have a Bedroom filled with stock (Just stock no furnature). Usually my stock comes in and 25% goes straight back out that evening. Rest up to the bedroom

But I will have a look at them - it would be great for Returns (i.e UK Address)

Thanks for that.

Nice! What do you sell ? lol