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Agent transfer of ownership of goods (SoGA)
Hello,
I’m hoping someone can help me with an issue relating to VAT liability, but which is underpinned by ownership of goods.
Essentially, I am seeking to establish my VAT liability as a sole trader operating an online retail business in an agent capacity - it would commonly be described as a dropshipping model:
A purchases from me (B) on an online marketplace for an unascertained product based on the product description published by B
B does not own this product, but subsequently purchases it from another online marketplace (C)
In completing the billing address and shipping address details, B instructs C to ship the product directly to A
My question is, assuming the only details in the contracts between A and B, and B and C are that the contact between B and C forms at the point of dispatch, if and when does B take ownership of the goods and if and when does this ownership transfer to A?
This relates to VAT liability as it is hoped that B’s position can be both one of an agent but also a non-limited cost business, such that under the Flat Rate Scheme, the liability is that of w “retail business not elsewhere classified” (6.5%) rather than a “limited cost business” (16.5%). For the latter to be true, B must take transitory ownership of the relevant goods.
Bit of a complicated one and speaks to the lack of case law covering this area and the draft Bill put forwards by the Law Commission in relation to this grey area, but any advice would be greatly appreciated.
Many thanks!
I’m hoping someone can help me with an issue relating to VAT liability, but which is underpinned by ownership of goods.
Essentially, I am seeking to establish my VAT liability as a sole trader operating an online retail business in an agent capacity - it would commonly be described as a dropshipping model:
A purchases from me (B) on an online marketplace for an unascertained product based on the product description published by B
B does not own this product, but subsequently purchases it from another online marketplace (C)
In completing the billing address and shipping address details, B instructs C to ship the product directly to A
My question is, assuming the only details in the contracts between A and B, and B and C are that the contact between B and C forms at the point of dispatch, if and when does B take ownership of the goods and if and when does this ownership transfer to A?
This relates to VAT liability as it is hoped that B’s position can be both one of an agent but also a non-limited cost business, such that under the Flat Rate Scheme, the liability is that of w “retail business not elsewhere classified” (6.5%) rather than a “limited cost business” (16.5%). For the latter to be true, B must take transitory ownership of the relevant goods.
Bit of a complicated one and speaks to the lack of case law covering this area and the draft Bill put forwards by the Law Commission in relation to this grey area, but any advice would be greatly appreciated.
Many thanks!
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