hi, FSA regulated companies cannot reclaim VAT so there is an incentive for them to buy from non UK EC countries as they won't get charged VAT. Am I right?cheersSteve Warren
Hello, if you have any questions or need further clarification after reading my answer please let me know.
If you are not able to reclaim VAT , then the same would apply to any VAT on imports of goods from non-EU countries. You will not be able to reclaim any import VAT.
More information on VAT on imports of goods from non-EU countries can be found here
If you need more information please let me know.
My question is about paying VAT not reclaiming. A firm only selling financial products is not able to reclaim VAT but are obliged to pay VAT when they receive an invoice from a UK firm registered for VAT. If they buy those same products from an EC country VAT would not be included on the invoice so represents a reduction in cost versus a UK supplier. Is this correct?
thank you for your response.
If you buy services or goods from UK VAT registered company, VAT is charged and you can't claim it as input. The same would apply if the supplier was from EU country. You will be charged VAT but you won't be able to reclaim as VAT input. There are exceptions if both the buyer and seller are VAT registered. In this case the taxable supply is zero-rated and no VAT is charged on the supply.
What you are saying is not the normal situation. If a French company ships products to the UK they do not add VAT to the invoice so the receiving company does not pay it. That is really what I am trying to understand. Is there some other way where VAT is paid on good imported from EC?
Thank you for your response..
If the French company ships products to the UK and both the French and British companies are VAT registered, then the taxable supply is classed as zero-rated and no VAT is added to the goods value. Otherwise ....
If you import goods, VAT becomes payable at the time of importation.
There is more information on this under the heading "payment of VAT on goods from abroad and arrangements to defer or suspend payment" here