to VAT or not to VAT?

[cyberllama]

Hi all,
We are trying to set up an internet shop selling fairly traded clothing and jewellery from south america. We need to know if we need to add a VAT charge to our stock?
I've asked around about this and got myself completely confused. I was informed you do not have to register for VAT unless we have a turnover of £58k or over - extremely unlikely at present. But does that mean we still have to add VAT to our prices or not? Also, since this is an internet shop, not all of our customers will be from the UK - does this make a difference?

I've mistakenly downloaded an 84 page pdf file from Customs and Excise about this, and I don't understand a word. Help in words of two syllables or less would be great, better still, a simple yes or no(!)

cheers
Bel and Carl
cyberllama.co.uk

[mike.bolton]

Hi

If your turnover is less than the VAT limit (it has gone up to £60k at the last budget) you do not add VAT to your prices.

You will pay VAT on supplies you buy from your suppliers (if they are registered) but the price you then charge your customers will simply include this as part of your costs since you cannot reclaim it against the VAT on your sales.

Put simply, if you are under £60k turnover, forget about it.

The question of overseas customers can be an issue if you are VAT registered, so for now keep under the limit!

Go to Business Link at:

http://www.businesslink.gov.uk/bdotg/action/layer?r.l1=1073858808&r.s=tl&topicId=1073859245 which is a much more user friendly way of working it out than 58 pages from HMRC!

However there is a simple 5 page document from HMRC called - "VAT - A beginner's guide for businesses". Go to http://customs.hmrc.gov.uk and click on VAT Home top left, click on the link Introduction to VAT and go down to the section Further Help and Information. The first document listed is the beginners guide, in plain English.

Good luck

Mike

[cyberllama]

Thank you very much. If only HMRC were as straightforward as you! :-)