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Agent transfer of ownership of goods (SoGA)

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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!
    Tags: None

  • #2
    It would appear the devil is in the detail
    .
    Why would it be assumed that the contract between B and C forms at the point of dispatch from C and not at the point B takes delivery?

    What happens if the goods are lost in transit between C and B? who carries the risk and is A then liable to B?

    Comment


    • #3
      In this case, C was primarily Amazon UK, which states in its Conditions of Sale: “We only accept your offer, and conclude the contract of sale for a product ordered by you, when we dispatch the product to you and send e-mail confirmation to you that we've dispatched the product to you.” (Source: https://www.amazon.co.uk/gp/help/cus...deId=201489400)
      Also note that B never takes delivery - C delivers directly to A.

      As a PS, I should have noted that the agent capacity is considered to be disclosed, so the intention is to demonstrate that B is a disclosed agent and also a non-limited cost business.

      Thanks!

      Comment


      • #4
        Sorry I read it wrong but the question of risk in transit is still valid.

        Comment


        • #5
          Presumably courier is liable to C through contract 1, C is liable to B through contract 2 and B is liable to A through contract 3?

          Comment


          • #6
            Are you presently VAT registered and are you in the UK?

            Comment


            • #7
              I am no longer VAT registered but this relates to a period when I was, and yes, I am based in the UK.

              Comment


              • #8
                If you are not registered for VAT then you will only be selling at an item at £x only. If you are purchasing something then a trader can quite legitimately charge you VAT as a separate item which you must pay.

                Example
                You buy goods from dropshipper at £20 + Vat = £24-00
                You sell item to purchaser at £40 - the only extra may be a delivery charge.

                You have no VAT liability to HMRC.

                Comment

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