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Imagine that I bought some items online (they could be consumables, materials or the like) to a shop based in a non-EU country. The goods were sent by post and weren't stopped at customs, so I haven't paid VAT on them. Can I still claim them as a business expense, if I'm a self-employed that doesn't issue VAT? (I don't know if it's relevant, just in case it is)

  • Why wouldn't you be able to do that? VAT on an item has nothing to do with that item being a valid business expense or not. – user3244085 Aug 22 '17 at 12:05
  • I don't do VAT because I'm small. That might be tangential, but I added it just in case it makes a difference. Regarding my original question, what I'm worried about is if I got the goods into the country without paying VAT, they might look as if I tried to "smuggle" them into the country, and if I then declare them as business expense, I don't want Lizzie's Customs to fine me for that. I don't mind to not declare £20 in wires from ebay as business expenses, but what if it is something more expensive, like a piece of hardware or a power-tool? – mundodisco8 Aug 23 '17 at 9:04
  • Do you report every expense in detail? It's in your bookkeeping, but only if they audit your books would that be found. And even then the audit will not be done by Customs. Don't think you should worry too much. – user3244085 Aug 24 '17 at 11:21
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Yes, you can. You only need to issue VAT when you're VAT registered, which is what you do when you earn over a certain amount. Im not sure what it is, but its pretty high. I think you might be getting mixed up with the fees of taxes here. Claiming on expenses means you wont pay tax on what you earnt because the cost of that item was not considered profit. The amount of tax youpay on goods doesn;t really have to do with anything regarding your own earnings.

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As has been said, you can claim that purchase as a business expense. But you will have to convert the cost of the purchase from the purchase currency to sterling. And whatever conversion rate you use will have to be used for all purchases in that currency during that tax year: so if you use the rate on the day you made the purchase, you will need to use that even if the rate changes later in the tax year. You only have to pay VAT if you’re VAT registered.

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