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Hello!
I’m planning on starting a vintage shop and a bit stuck for information on VAT issues.
Does anyone know if used clothing is VAT exempt?
Should we charge VAT on the sale of our second hand goods in our small shop?
Is there a threshold on VAT exempt sales (we will be a small business!).Any pointers/advice/links would be ever so gratefully received! Thanks!
LouieLouieShop
Hi LouieLouieShop
It sounds as though you have very limited knowledge about VAT and I would suggest that you start by rreading teh HMRC short guide called “Should I be registered for VAT” which is here http://tinyurl.com/396kxa. It explains how the system works and when you need to register.
(You could also read my own “Beginner’s Guide to VAT” which you can download from this website. It’s written in less technical language so might be easier to read if you’re a complete novice. It’s a bit out of date as I need to update it to reflect the 20% VAT rate. But the principles are otherwise the same and you may find it a useful starting point.)
If you’re selling adults clothing, then you would need to register under the normal rules as explained in the leaflet, if the value of your sales will exceed the registration limit which is currently £73,000. So if you think that your sales will be below that limit, then you won’t have to register. A lot of small retailers aren’t actually registered because their sales are below the limit.
But if you do have to register, you would probably find that you’re eligible to use a “margin scheme” which enables you to pay VAT only on any profit that you make, rather than the whole selling price. You can find information on these schemes here on the HMRC website http://www.hmrc.gov.uk/vat/start/schemes/margin.htm
I’d also recommend that you find yourself a good accountant – they are really good at practical issues such as getting registered for VAT and most of them will have one or two clients who use the margin scheme and will understand how they work.
Otherwise, sit down for half an hour with a cup of tea (or something stronger!) and have a good read of the information I’ve suggested. Good luck with your new venture!
Marie
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