Intra-EC VAT

[Swanny86uk]

A little confused with how VAT works when getting goods supplied from an EC member state. What I understand is that if we voluntarily register for VAT here (UK) the goods we order from the EC member state are zero-rated. This means we are responsible for the VAT at the rate in the UK.

If this is correct, my question is do we then charge VAT on those products we ordered and then send this collected VAT to HMRC? After a few phone calls to HMRC and a horribly written guidebook we are none the wiser. I've read about claiming back Input Tax which we were told we could do. But to me this just seems like we collect VAT, pass it to HMRC and they pass it back to us. Strange.

In need of some clarification here as the guidebook has the answer but its written in cyber-english.

Cheers

[Skyline D]

It is strange but that is exactly what happens. You pay fictional VAT on the import of goods from EC countries and claim it back at the same time so no cash actually passes hands.

[Swanny86uk]

Thanks for the clarification, bit of a backward process but I'm sure theres some weird reason why its done that way. Just to clarify if we recieve our products and then sell them, do we add the 15% UK VAT rate ontop of the retail price? for example £100 product becomes £115.

Thanks for making this easier to understand than the guidebook! :)