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[Importing] Importing goods problems (8)

07-04-2018 05:22 AM #1 telebind123 (Member)
[Importing] Importing goods problems

Hello,

So I'm based in the US, trying importing from China to UK fulfillment center without an enormous delay.

I wanted to import goods from alibaba to a fulfillment center in the UK so that I could sell to the UK and EU member states.

However, I quickly realized that I would have to register for VAT in order to import goods to UK fulfillment centers.

The problem is that the turnaround for the VAT is around 3 calendar weeks, and thats if the HMRC (VAT issuing authority) doesn't ask for additional documentation. After that, the production lead time + delivery time from alibaba will be 2 weeks. So about 1.25 months to 2 months is what I'm looking at if I want to go through with importing goods to the UK.

Obviously I would have liked to get started importing ASAP. Is there any way to bypass the VAT registration for imported goods in the UK? I'd be using a fulfillment center in the UK.

If I do not register for VAT to import goods, what kind of penalties would I be facing? Would goods even make it past customs?

Please let me know if there is a way to bypass VAT for imports (maybe get a third party company to import in their name?) and if there isn't would my goods make it past their customs to the fulfillment center if I decided to not register for VAT?

Thanks

07-04-2018 09:53 AM #2 pekadis (Moderator)

You need to register for VAT:
- for each EU country where you physically store goods.
- where you reach the threshold in terms of turnover (sales volume)

There's no way around additional delays initially, but after that, it's only the 2 weeks you indicated.

There's a way around of course, but is that worth doing if all that does is save you 4 weeks now and nothing afterwards?

You could:
- dropship straigth to the consumer
- find a VAT registered company to buy and import and then distribute
- register a company yourself, but that'll likely take some time as well

Small packages might be able to fly under the radar when it comes to VAT and import duty (don;t forget that part!), but any significant shipment will not.

If your business plan is good enough, it should be able to withstand a 4 week delay. If it doesn't, the issue isn't the 4 weeks, but the plan itself.
And yes, I do realise that you lose out on sales in those 4 weeks.

So don't worry about an initial delay, it's nothing compared to the business volume you are able to do in years

07-04-2018 02:26 PM #3 telebind123 (Member)

Appreciate the response, thanks.

What do you mean by "register a company yourself, but that'll likely take some time as well" to bypass VAT?

I do have an LLC registered in the states, did you mean to register an ltd in the UK?

I can withstand 4 weeks but if there was a faster route for a foreign business I'd go for that. I am in the process of registering for a VAT number.

Additionally, I've heard of some EU member states that have online applications for VAT with a pretty quick turnaround. Do you happen to know if the UK has this? Currently unable to find it.

Thanks

07-06-2018 09:43 AM #4 pekadis (Moderator)

I don't believe that for the UK, there's an online form. Just this: https://www.gov.uk/government/public...-selling-vat1a

But when we applied, they were really quick to issue a VAT number. Within 2 weeks we got it.

07-06-2018 01:46 PM #5 cmdeal (Veteran Member)

There is a VAT threshold https://www.gov.uk/vat-registration-thresholds so if your revenues will be lower than that, you won't really need to register for VAT in the UK.

Various fulfilment centres may require you to be VAT registered, however, but this is their requirement, not the requirement of UK VAT law.

07-06-2018 02:05 PM #6 pekadis (Moderator)

@cmdeal - that's not correct. If you store goods there through FBA (or any other warehouse), you immediately have to register.

It's like I mentioned before:

You need to register for VAT:
- for each EU country where you physically store goods.
- where you reach the threshold in terms of turnover (sales volume)
You trigger the necessity to register through either storage or turnover. So storage in the UK and exporting 200K worth of stuff to Germany would trigger VAT registrations in BOTH the UK and Germany for example.

07-06-2018 02:27 PM #7 cmdeal (Veteran Member)

Quote Originally Posted by pekadis View Post
@cmdeal - that's not correct. If you store goods there through FBA (or any other warehouse), you immediately have to register.

It's like I mentioned before:


You trigger the necessity to register through either storage or turnover. So storage in the UK and exporting 200K worth of stuff to Germany would trigger VAT registrations in BOTH the UK and Germany for example.
VAT rules are actually not common across EU member states.

In the UK, the threshold for VAT registration for UK companies is clear https://www.gov.uk/vat-registration-thresholds.

There are various fulfillment centres in the UK such as amazon which do require companies to be VAT registered, but once again, that is their requirement, not UK HMRC's requirement.

07-06-2018 02:30 PM #8 pekadis (Moderator)

True, that's for UK companies.

It's a different story for foreign companies.

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