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Sam
Sam, Accountant
Category: UK Tax
Satisfied Customers: 6506
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Capital Gains, CIS ask for Sam Tax
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Tax free purchases. My family member has a business in the

Customer Question

Tax free purchases for export.
My family member has a business in the UK where the buy clothing at retail and resell it ONLY to Japanese customers.
I think there should be a way to make these purchases tax exempt since the end user is not in the UK and have more or less verified this as possible through my own research.
She got her husband to look into this further and he seems to think they need to form a company in order to do this but I am thinking that is not the case as we do something similar in the USA as sole proprietors and did not have to form anything.
So what do you think is the best way for a very small business to make tax free purchases for export only in the UK?
I figure if they eliminate the huge tax they could double their profits.
Submitted: 1 year ago.
Category: UK Tax
Expert:  Clare replied 1 year ago.

Hi

Thank you for your question

My name is Clare

I shall do my best to help you but I need some further information first.

How long did you live together and what is the value of the various assets

What income do you each have?

Customer: replied 1 year ago.

I have no idea. This my wife's cousin and her husband. They have lived in the UK for a year or two. He is s citizen and she has some kind of permanent visa.

I don't think they have much income but honestly I am not seeing how pertinent this could be. Does the law apply differently to rich and poor?

Expert:  Clare replied 1 year ago.

My apologies - there was a site glitch and this was NOT meant for you

Expert:  Clare replied 1 year ago.

I shall opt out as this is not my area

Expert:  Sam replied 1 year ago.

Hi

I am afraid there is no way of changing this situation as the business OPERATES in the UK - however do the goods come to the UK and then are exported out again - are the customers living in the UK - is there a shop where customers can browse, tell me more about how this business operates.

Thanks

Sam

Customer: replied 1 year ago.

The business buys goods and pays tax on them, they are buying retail. They only buy in the UK.

They sell them only to customers that are physically in Japan. all of the goods they sell are shipped out of the country.

Based on everything I have read they do not have to paying the VAT when they buy their products since they are all leaving the UK.

see here:

https://www.gov.uk/guidance/exporting-goods-from-the-eu-to-a-third-country-outside-the-eu

I am not sure how the above could NOT apply.

Expert:  Sam replied 1 year ago.

Hi

This is why I have asked further questions, and I assume there is no shop that customers can come into but this trade is operated from home for example.

But you are mixing up VAT with export duties which are two different matters

But as all your goods are exported to a NON EU country and depending on what the materials of the clothing is 0 it would seems there is no VAT to charge but there may be duties to pay in Japan in import duties. I am not an expert is Japan and their tax regimes so you will need to establish this.

But there are no charges in the UK arising on the business for these sales.

Thanks

Sam