Poole Office: 01202 678555

Wimborne Office: 01202 849169

  • slider-1.jpg
  • slider-2.jpg
  • slider-3.jpg
  • slider-4.jpg

Request a Call Back

Please enter your name and phone number

Latest News

32.5% Corporation Tax on overdrawn directors’ loans
07/08/2018 - More...
HMRC defines a director's loan as money...

Tax free health benefits
07/08/2018 - More...
There is no requirement for employers to...

Gifting share in home
07/08/2018 - More...
Most gifts made during a person's life...

Search News

Newsletter

With our newsletter, you automatically receive our latest news by e-mail and get access to the archive including advanced search options!

»Sign up for the Newsletter
» Login

 

VAT – goods on sale or return
07/08/2018

There are special VAT rules that must be followed when you sell goods on a sale or return basis. Goods sold on a sale or return basis (sometimes known as 'on approval') are goods that are effectively supplied to a customer free of charge and the supplier is only paid when the product has been sold. If the product remains unsold then it can be returned to the supplier without any charge.

This type of sale is most often seen in the retail sector where a supplier is eager to work with a new retailer, perhaps one who needs a range of merchandise available for retail sale but does not want to purchase a large amount of stock upfront or where a supplier is trying to launch a new product and the retailer is unsure if there will be a demand.

From a VAT point of view, the goods have not been sold by the supplier until such time as they are adopted by the customer. This is the point in time when the customer indicates a wish to keep the goods. By agreement, the supplier can put in place an agreed maximum time limit that the customer has to return the goods.

If a time limit has been fixed for a period of 12 months or less then the basic tax point is the date when that time limit expires. If there is no time limit or the limit has been fixed more than 12 months in the future, then the basic tax point is 12 months from the date when the goods were sent.

In either case if the customer adopts the goods before the time limit expires, the date of adoption becomes the basic tax point. The basic tax point is overridden by the issue of a VAT invoice.


Contact Us

Poole Office

Tower House, Parkstone Road
Poole, Dorset
BH15 2JH
Tel: 01202 678555

This email address is being protected from spambots. You need JavaScript enabled to view it.

Company Registration No: O7430971
VAT Registration No.107585703

Wimborne Office

Beaufort House, 2 Cornmarket Court
Wimborne
BH21 1JL
Tel: 01202 849169

Membership

ICAEW-White

Save