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BackyardBullion

We are sorry....Group Orders are no more blame VAT registration!!!

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Some of you may have noticed that I put up a thread about a possible next group order - it was actually a draft thread I was preparing and accidentally made it live. 

I have subsequently taken it down. 

We are in the process of doing some due diligence with our accountant about the group orders and how it might relate to our VAT registration. 

It is an incredibly complex situation and I am sure you can all appreciate the significant financial liabilities that might occur from not following the rules. 

So, for the time being please bare with us and sorry for getting your hopes up in that mistaken thread posting!

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Absolutely key that you understand your position and exposure herre

I guess a potential solution is for someone else from the forum to submit the Group order in the event that you get stung for VAT?

 

 

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Just now, Mike said:

Absolutely key that you understand your position and exposure herre

I guess a potential solution is for someone else from the forum to submit the Group order in the event that you get stung for VAT?

 

 

Yep, someone else would have to take and make all the payments. 

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The biggest issue is that I am a sole trader, so it is me, my person, not the entity and business that is VAT registered. So in theory anything I do could be part of the business - especially as we are buying coins which is similar to my business. 

I always viewed it as a collective buying group before, separate to the business. But when the VAT man has his eye on you and you need to do compliance checks and inspections it is not worth the risk. 

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1 minute ago, BackyardBullion said:

Yep, someone else would have to take and make all the payments. 

And prepare the order, And receive delivery, And check delivery, And package up, And post out, And And And....

I’m sure that the whole process is a NOT insignificant amount of work for you and Mrs BYB



Added 0 minutes later...
1 minute ago, BackyardBullion said:

The biggest issue is that I am a sole trader, so it is me, my person, not the entity and business that is VAT registered. So in theory anything I do could be part of the business - especially as we are buying coins which is similar to my business. 

I always viewed it as a collective buying group before, separate to the business. But when the VAT man has his eye on you and you need to do compliance checks and inspections it is not worth the risk. 

As I started off - Absolutely key that you get the right advice and do what’s right for you 👍

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You are acting as a agent for other members of the forum - you are not the principle - ie the person who is actually behind the purchase.

i see section 54 of the VAT Act 1991 in essence provides that an agent never joins the VAT chain of transactions: supplies are deemed to be made directly by or to the principal on whose behalf the agent is acting. Your accountant will know this - so it should not be a problem. You are buying coins on behalf of someone else - if you make a charge for providing the service that would be subject to VAT - the postage to the member may be subject to VAT but whatever, the coins will carry the VAT (or not) from the original vendor as if you were never involved.

Edited by sixgun

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16 minutes ago, sixgun said:

You are acting as a agent for other members of the forum - you are not the principle - ie the person who is actually behind the purchase.

i see section 54 of the VAT Act 1991 in essence provides that an agent never joins the VAT chain of transactions: supplies are deemed to be made directly by or to the principal on whose behalf the agent is acting. Your accountant will know this - so it should not be a problem. You are buying coins on behalf of someone else - if you make a charge for providing the service that would be subject to VAT - the postage to the member may be subject to VAT but whatever, the coins will carry the VAT (or not) from the original vendor as if you were never involved.

Yes indeed, this is one of the other options to look at.

https://www.gov.uk/guidance/vat-costs-or-disbursements-passed-to-customers

In theory we fit all the requirements for this.

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1 minute ago, BackyardBullion said:

Yes indeed, this is one of the other options to look at.

https://www.gov.uk/guidance/vat-costs-or-disbursements-passed-to-customers

In theory we fit all the requirements for this.

yes - i feel sure you do - once you get the confirmation and reassurance you need, it will be full steam ahead again.

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5 hours ago, sixgun said:

yes - i feel sure you do - once you get the confirmation and reassurance you need, it will be full steam ahead again.

@BackyardBullionI guess as long as you can show that you don't actually gain anything that could be deemed a business asset then you are fine. Having said that I think you once mentioned that you keep the packaging materials and reuse them for your parcels, but unless the VAT man is interested in your packaging then you will probably be ok. The only thing I can think of that might be an issue is the tubes/monster boxes you end up with that I imagine you sell on (totally fine with us here of course), or maybe the tips people give? I have no idea, you should probably not listen to me and just listen to your accountant!

Edited by StackerNoob

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Just now, StackerNoob said:

I guess as long as you can show that you don't actually gain anything that could be deemed a business asset then you are fine. Having said that I think you once mentioned that you keep the packaging materials and reuse them for your parcels, but unless the VAT man is interested in your packaging then you will probably be ok. The only thing I can think of that might be an issue is the tubes/monster boxes you end up with that I imagine you sell on (totally fine with us here of course), or maybe the tips people give? I have no idea, you should probably not listen to me and just listen to your accountant!

You make very valid points. 

The unboxing videos alone are a clear way we benefit.

These are the same points my accountant made today.

I'm afraid that for the time being we will NOT be doing another group order.

The decision comes down to the fact that it is an interpretation of the guidance and VAT laws. Our interpretation may be different to the inspector that audits me. 

We don't want to end up in a tribunal and face countless legal bills and back VAT bills. 

Even though the chance of this is low - it still puts us off.

I will be addressing this decision in more detail in a video at a later date - but for the time being....

We are sorry, no more group orders. 

We are going to talk with the EU mint about how we can still support the silver forum buyers in perhaps the form of a shipping discount code.

But from Mrs BYB and myself, we want to extend our apologies for no more group orders and out heartfelt thanks to everyone who has joined and supported the orders we have done in the past.

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16 minutes ago, StackerNoob said:

@BackyardBullionI guess as long as you can show that you don't actually gain anything that could be deemed a business asset then you are fine. Having said that I think you once mentioned that you keep the packaging materials and reuse them for your parcels, but unless the VAT man is interested in your packaging then you will probably be ok. The only thing I can think of that might be an issue is the tubes/monster boxes you end up with that I imagine you sell on (totally fine with us here of course), or maybe the tips people give? I have no idea, you should probably not listen to me and just listen to your accountant!

I was going to say the same thing,all can be seen as a way he's gaining from it.Then before you know it HMRC will say your hiding your own stock within the group order,or some such terrible etc.

9 minutes ago, BackyardBullion said:

I'm sure you can, but I do this because I love it. Fighting the tax man is not fun, even with insurance.

I want to focus on what I enjoy, poured silver.

Seems like it could more more hassle then it's worth :(

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One thing we are looking at doing is organising it so that you can place an order and pay directly with the EU mint. This keeps the capital off our books.  Then the orders are sent to us to distribute out.

Same savings on international shipping.

Does mean a few negatives, a) you have to place and pay for the order yourself and b) I would have to charge VAT on the postage costs from me to you.

It still saves a decent bit of cash for people compared to a direct order. 

What would people's thoughts be on this?

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Not surprised, my first thought on the VAT was the group order would be complex and likely to go.  One thing though with European Mint, as there is no input VAT,  you're not allowed to charge VAT (as i recall from my dealing with VAT).  For Goldsilver the same applies on input VAT, but its muddy method they use and perhaps something you dont want to argue with HMRC. 

 

Edited by Martlet

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4 hours ago, BackyardBullion said:

Does mean... I would have to charge VAT on the postage costs from me to you.

Stamps are VAT exempt - so no VAT if using stamps.

Special delivery has VAT already - so unless you charge more than the cost of special delivery there is no extra VAT to pay - you just pass the VAT through to the member.

The addition of added tax (VAT) only applies if you add value (increase the price) of your goods and services. If there is no increase in price then it is neutral as far as VAT is concerned.

If the delivery costs you £11 inc VAT and you charge £11 inc VAT, on paper you pay the post office £11 inc VAT, reclaim that VAT and then charge it back to the customer who will pay £11 inc VAT.

Edited by sixgun

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It’s simple, just run the group orders at a loss to yourself🤔

I’m kidding of course; I can see why you’d be nervous about a tax man seeking VAT on a £50,000 purchase - even though you would be technically correct, who wants to spend time arguing over a 10k bill? I don’t think anyone needs that stress!

For anyone saying it’s easy, just look at all the bullion dealers that charge 20% vat on second hand silver, despite the VAT only being chargeable on the profit, I’m guessing it just isn’t worth the hassle. (Please correct me if I’m wrong)

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Sounds like it could be a massive pain in the arse , that amount of money going in and out of accounts is always going to look dodgy even if there is a argument for it .

Thanks for doing them for so long already @BackyardBullion

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What this does show is that the red tape has gotten people who are straight as a dot, wound up so tightly that they're worried about breathing the wrong way lest they get grief from Big Brother.

I would volunteer to take over but I'm not part of the forum furniture enough yet to justify the trust required, nor would I expect otherwise.

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I'm another who thought it was the end of group orders when you originally posted about having to charge VAT. It was a big surprise when you posted the original April/May group order info accidentally. No matter how squeaky clean you are its almost inevitable that the level on ingoings and outgoings generated from recent group orders would come under suspicion. I certainly don't blame you for not wanting to fight the tax man - I'd be avoiding it for the same reasons...  life is just too short for that headache.

As for the future of the EU mint another discount code on shipping would definitely be appreciated.

Edited by AppleZippoandMetronome

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