VAT pricing between England & Ireland

Nameloc · 07-09-2016 8:14am #1

Hi guys,

So I have finally launched my product and actively trying to recruit clinics in the UK and Ireland to sell my product.

My price to the UK is £150, but being a sole trader, I haven't registered for VAT.

However, one of bigger clinics came back with this question.
"What is the RRP and what would be the cash margin that the retailer would retain? We would clearly need to include VAT within the RRP."

Would I need to factor in VAT to prices for the UK? Do I use UK or Irish rate?
This would really hit my margins as I hadn't factored VAT in my pricing, is there a way I can make sure it reduces the hit I take? E.g change to Ltd company and register for VAT to claim back?

Thanks

Lockedout2 · 07-09-2016 8:32am

Perhaps you should visit an accountant as sole trader v limited company is not what determines VAT registration its turnover.

What does the product cost you to buy?

What's your margin?

What margin is the retailer expecting?

Can the end purchaser recover the VAT?

Nameloc · 07-09-2016 9:00am

The product costs me about £80 to make and sale price is £150.

However, I may be able to improve my margins using the clinic scan files rather than plain images but that is unproven.

I dont know what margin they are expecting, but I would assume roughly £30-£40

Yes I would imagine the purchaser can reclaim as they are a franchise with 15 outlets in the UK

Lockedout2 · 07-09-2016 9:16am

Nameloc wrote: »

Yes I would imagine the purchaser can reclaim as they are a franchise with 15 outlets in the UK

So the end user is in business and not a private individual and can recover the VAT so that it's not a cost to them.

If that's the case then it's £150 plus VAT and you are going to charge the intermediary £100 with no VAT because your not registered.

jimmii · 07-09-2016 9:19am

It's not obvious what is happening here really!

When you say sale price do you mean that's your wholesale price that you are selling it the clinic for? If so then for them to be making £40 off it then they need to be retailing it for £228.

Are you registerered in Ireland or UK? Assuming it's Ireland you wouldn't be charging them VAT even if you were registered for it so long as they are also registered.

For the VAT on the retail price it's the country it's being sold in that dictates the rate charged so for clinics selling in Ireland it's 23% and the UK it's 20% just seen you asking about that in the OP.

Nameloc · 07-09-2016 9:35am

To be honest I have a direct sales model and because I am not large enough and to avoid complications, didnt want to start the VAT aspect too soon.

I saw using scan clinics as a way to build sales and exposure. But stupidly didnt consider the VAT aspect!!

I am registered in Ireland

So basically as an Irish company, I dont charge VAT to companies in the UK?
But the companies in UK will need to add VAT when selling my product?

jimmii · 07-09-2016 9:43am

Nameloc wrote: »

I am registered in Ireland

So basically as an Irish company, I dont charge VAT to companies in the UK?
But the companies in UK will need to add VAT when selling my product?

Correct. That's assuming they are VAT registered. If you were registered in Ireland and they weren't registered in UK then you would charge them Irish VAT.

Nameloc · 07-09-2016 12:02pm

Thank you all for your help.

One final question, if I wanted to offer them a referral option instead of reselling and perhaps take payment from their clients and I invoice them, I presume they would still need to add VAT for that?

mrawkward · 07-09-2016 2:14pm

Most medical services are exempt from VAT, check it out!!

Nameloc · 07-09-2016 2:40pm

mrawkward wrote: »

Most medical services are exempt from VAT, check it out!!

I've checked the clinics and they are all VAT registered

jimmii · 07-09-2016 4:23pm

Nameloc wrote: »

Thank you all for your help.

One final question, if I wanted to offer them a referral option instead of reselling and perhaps take payment from their clients and I invoice them, I presume they would still need to add VAT for that?

If they are part of the process then VAT will be involved. If they act as an agent and invoice you a commission on each sale there would be VAT on the commission.

Walter2016 · 07-09-2016 5:48pm

mrawkward wrote: »

Most medical services are exempt from VAT, check it out!!

Nameloc wrote: »

I've checked the clinics and they are all VAT registered

The poster is suggesting that your product/service may be a vat exempt product and therefore even if a company is vat registered your product sells at a 0% vat rate.

Example is a bookshop. Most will be vat registered however books have 0% vat, so all their sale of books are at a 0% rate whereas if they sell stationery, then the sales of stationery are at 23%.

You will need to check what vat rate applies to your product and then factor that into the consumer price.

Also ask the people you are selling to what margin they would expect. My guess is it will be higher than the £30 - £40 you suggest.

I would suspect that a margin of 30%-40% will be required, thus a retail price of £219 - £249 if no vat is applicable and a retail of £259 - £299

http://www.revenue.ie/en/tax/vat/rates/index.jsp

VAT pricing between England & Ireland

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