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VAT calculation in UK

T

thomasp

pfm Member
Hi all,
Question on the subject matter .. Let say you go to a hifi store in London and the price listed on a LP12 shows 100K, is the VAT (20%) embedded in the 100K or is it added on top of the 100k thus making the walk-away price of 120k. I am from Toronto Canada and in US and Canada VAT/Sales Tax is on top of the listed price whereas in Japan, it is usually included/embedded. Thx for the help.
Tom
 
In the European countries I've lived in (UK, France) VAT is indeed normally included in the displayed retail price.

A lot of countries have schemes to enable private individuals taking the item out of the tax zone to claim the VAT back if they jump through the correct administrative hoops in the right order...

Personally, I don't purchase luxury items like hifi outside the country (or, at a pinch, tax zone) I live in. I value pre and after sales services such as guarantees and installation.
 
Local VAT is not payable on export items in the country of origin, but anyone buying for export will be liable for VAT on landing in their country.

Something in your possession is rather unusual but in a worst case you could end up paying VAT in both countries, allbeit you'd be able to claim the UK VAT back. In the past, very many UK traders would sell items minus VAT on proof that the item was being exported, but this is now, at least borderline, illegal.

Many/most? countries operate under the same rules as the UK - items sold by traders that are sent internationally must be taxed by the trader at the rate of VAT of the importing country, and pay that VAT to the receiving country. This is why not charging VAT is borderline illegal/a grey area - you'd need a trader with experience to get a proper idea of the position.

Keep your VAT receipt and be prepared for hassle if it is found or you declare it.

Buying from anyone who is not VAT-registered is easy - you'd not pay UK VAT, but you would be liable for local VAT on import. The only stumbling point, potentially, if found or declared, would be valuation.
 
VAT is included in displayed prices for retail sales but some websites ask if you are VAT registered in which cases their displayed prices are without VAT added even though it will be charged (unless you are from overseas).
 
Barrymagrec said:
VAT is included in displayed prices for retail sales but some websites ask if you are VAT registered in which cases their displayed prices are without VAT added even though it will be charged (unless you are from overseas).
Click to expand...

Either way, the seller should make it clear whether or not the stated price includes VAT.
 
I think for the OP's purposes, if the seller is offering the product at retail, then the displayed price will include VAT. This is a legal requirement. So the ticket price will include VAT @ 20%
 
if the seller is offering the product at retail, then the displayed price will include VAT. This is a legal requirement.
Yes, that's my original understanding/assumption until a Uk dealer told me he's not register/collect VAT and he is selling at manufacturer list price which includes VAT of 20%.
Anyway, I like to thank everybody for their inputs in this matter.

Tom
 
thomasp said:
if the seller is offering the product at retail, then the displayed price will include VAT. This is a legal requirement.
Yes, that's my original understanding/assumption until a Uk dealer told me he's not register/collect VAT and he is selling at manufacturer list price which includes VAT of 20%.
Anyway, I like to thank everybody for their inputs in this matter.

Tom
Click to expand...
That's a different matter. The dealer will have effectively paid 20% VAT on the trade price which they can't get back, so to get a decent profit margin their retail price will have to be the 'inc VAT' price, even though they're not passing that bit on to the taxman.
 
Generally the rule is if the seller is targeting the consumer, prices displayed will include VAT; if the seller is aiming to sell wholesale to VAT registered businesses the prices will not include VAT but the price list will make this clear ( perhaps in small print ;) ).

PLEASE NOTE:

As of 1st January 2021 the VAT Retail Export Scheme no longer operates. All retail buyers must pay VAT!!! Apparently the Treasury thought they would lose too much revenue to European tourists.

https://www.globalblue.com/tax-free-shopping/uk/ This site seems to suggest that items exported directly can still be purchased VAT free. So you could place an order to be delivered for you. This would be subject to the retailer being prepared to do the necessary paperwork and arrange delivery :rolleyes:

The OP will need to check the rules for importing tax paid goods in their own fiscal jurisdiction and decide if it makes economic sense.
 
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