News June 2007
The growth of Internet trading sites, such as eBay and Amazon, has created a boom in online sales. More and more purchasers are searching for bargains and buying all sorts of products from their desktop – and for any business, the sales potential is enormous.
But, as with all areas of commerce there are strict regulations that need to be adhered to - Terry Forsey,Technology Sales and Marketing Coach warns traders of the pitfalls…
“The ease with which you can start trading online means that what begins as a way of shifting unsold stock or making ‘pin money’ can quickly become a significant source of income. But sidestepping the traditional business start-up processes can be risky.
“HM Revenue & Customs (HMRC) is targeting e-traders with an online guide that advises them of their responsibilities. You have to play by the rules - if you buy goods to sell online, you should advise HMRC within 3 months and if the business has a turnover of more than £65,000, you have to register for VAT, even if goods are second-hand, a special rate VAT is applicable.
“My advice is to be ‘upfront’, be transparent and maintain records - as long as you have an audit trail, you have nothing to fear.”
Terry also believes that whilst the Internet opens up a global marketplace, careful attention should be given to the terms and conditions of sale in other countries – as ignorance of the law and local taxes is no excuse.
“When selling within the EU, you charge VAT at the UK rate, unless your buyer is also a VAT-registered business. You must also obtain commercial evidence that the goods have left the UK, such as a certificate from your freight forwarder.
“If your EU trade is greater than £260,000 per year, a monthly ‘Intrastat’ return must be completed for HMRC – this helps track the movement of goods in the EU.
“When selling outside the EU, VAT is zero-rated - as long as you can show proof of the shipment. You should advise the buyer that they might have to pay import duty and ask your freight forwarder to fill out an export declaration.
“If you sell regularly to overseas customers, my advice is to consult an expert as they will give you up-to-date information and offer guidance on specific shipments and any necessary licensing. You must be aware of the law of buying and selling of goods - it's the same as if you were trading in any other way."
For more information call 01536 771440 or email, terry@terryforsey.com.
ENDS
