Amazon Seller, UK VAT registration and questions

Lord TSC

Hey everyone,

Not a great day. Basically, I'm a small (like, very small) Amazon seller, selling through Amazon Fulfilled, which means all my stock is stored over in the Amazon warehouses in the UK. I was briefly registered for VAT for 9 months last year, and tbh, it was a disaster; it destroyed my ability to generate a profit, since the margins are small enough to begin with, and it just ate them up. So I De-registered eventually, and was able to grow the business up a bit, take a bit out each week and stay under the VAT threshold that would have required me to register again.

Amazon just e-mailed me, letting me know that there's changes to the UK law being made that will require any foreign (to the UK) businesses that store their stock in the UK to register for VAT and get a UK VAT number. If I don't get a UK VAT number, Amazon won't allow me to sell on their site any more.

This, to be blunt, is a massive kick to the teeth, and has me wondering if I can even go on with Amazon (which is to say the business as it stands isn't viable). But I need to get educated, quick, to figure out my next step here, and I'd appreciate help and info on registering for a UK VAT number.

Basically, how hard is the process for an Irish sole trader to get a UK VAT number? Do I need to register for an Irish number, then apply separately for a UK one, or can I get the UK number without an Irish one? If I do, can I charge VAT on UK sold goods and not on Irish ones? Presuming not. Presuming this is going to force me back onto Irish VAT as well and force me to charge VAT on everything. I presume I need an Irish number to get 0% VAT on European purchases (which is the majority of my purchases).

Tempted to throw the towel in on Amazon and switch over to Ebay, but there's reasons I've not done that before now. Just upset at this development cause the business had found its feet properly and now the rug has been pulled out from under me. When I was registered for VAT before, it was a disaster for things

I'm trying to start researching the whole "Irish business getting a UK VAT number" thing, but figured I could start things off by asking here, in case others have experience. Hope this is the right place to ask, I'm posting here cause it's a VAT question.

(And to pre-emptive a common response, no, registering for VAT doesn't mean I can just up the price of everything by the appropriate percentage; doing so would make Amazon hide pretty much all of my listings, due to the competitive nature of Amazon. So VAT comes directly off what I currently charge for the items and out of my margin).

Calahonda52

don't know about the VAT but can you register a business entity in UK and use it?

relax carry on

Assuming you've seen the link here regarding UK vat and Amazon? What's your yearly turnover figure as you mentioned that you did something to keep under the threshold

https://services.amazon.co.uk/services/fulfilment-by-amazon/vat-resources.html

https://www.gov.uk/guidance/vat-what-to-do-if-youre-an-overseas-business-selling-goods-in-the-uk

Deub

What if you put your stock in another country where Amazon operates?
Maybe the German, French, Italian or Spanish law doesn't require you to be VAT registered.
And as far as I know you could still have the products listed on all Amazon websites at the same time.

Lord TSC

So I was on a live chat with the UK Revenue this morning and they were baffled, and didn't know what I was talking about or why Amazon were telling me all this, cause they don't have any changes they know of.

relax carry on wrote: »

Assuming you've seen the link here regarding UK vat and Amazon? What's your yearly turnover figure as you mentioned that you did something to keep under the threshold

https://services.amazon.co.uk/services/fulfilment-by-amazon/vat-resources.html

https://www.gov.uk/guidance/vat-what-to-do-if-youre-an-overseas-business-selling-goods-in-the-uk

Turnover for the UK is £25k, well below the £70k quoted turnover figure there. Reading that, I can see it says...

In a different EU Country
You need to register for VAT in the UK if:

You store your goods in the UK or
You sell to UK-based consumers (non-business); and
Your sales exceed the UK distance selling VAT threshold of £70,000.

Right, so here's the issue...

Does that mean....
"You store your goods in the uk or you sell to uk based consumers" AND your sales exceed £70k.

Or

"You store your goods in the uk" OR "you sell to uk consumers and sales exceed 70k"

Those two things are different, right?

Though reading through the emails with Amazon, they say...

"Due to the new Legislation there can be a few factors that create the requirement for the UK vat number the first would be selling over the UK threshold the second is any merchant with their business outside of the UK but storing stock within the UK this being with Amazon FBA or an external storage facility will be required have a UK VAT number from March 2018."

"If you are storing good in the UK you will still need a UK vat number even if you are selling under the UK distance selling threshold."

Like, that's pretty clear, but goes against what they have on their site at the moment....

On the other hand, the UK Revenue said there are no new changes coming in like that.

Deub wrote: »

What if you put your stock in another country where Amazon operates?
Maybe the German, French, Italian or Spanish law doesn't require you to be VAT registered.
And as far as I know you could still have the products listed on all Amazon websites at the same time.

Yeah, that's an option. There's pricing and fee issues; transport costs, fee strucures, etc. But it's certainly an option. It's just that 90% of my sales come through Amazon UK, and I think they'll take a massive hit if stock has to ship from those countries to the UK. BUt yeah, defo an option to look in to.

Calahonda52 wrote: »

don't know about the VAT but can you register a business entity in UK and use it?

Hmm, I've no clue about that one but will look into it, thanks

Lord TSC

So the more I read of this, the more it seems that I probably SHOULD have been VAT registered in England for a while (since I store stock in England) but Amazon have never enforced it (presumably until now, and thats whats happening here) and I never knew that was a rule....

I found articles like this one...

https://www.theguardian.com/uk-news/2017/nov/24/vat-crackdown-increases-liability-of-website-marketplaces

Which is from back in November, and says...

"The move represents the second effort in as many years to close down an estimated £1.2bn-a-year tax fraud and follows a Guardian investigation as well as criticism of HM Revenue & Customs for being slow to act."

"The scam involves foreign companies warehousing products in the UK and selling them, VAT free, via internet market places. All traders based outside the EU and selling goods online to UK customers should charge VAT if their goods are already in the UK at the point of sale."

If true, I'm frustrated that the Revenue guy I was talking to this morning did not seem to know about that rule, and seemed to be handwaving me away saying I only needed to register if I was over the threshold. I did say repeatedly my stock was in the UK and he seemed to ignore that. Maybe Amazon are now pushing to get people registered because they are being hit themselves.

Based on that, looks like I don't have a choice but to register a UK Vat number to keep storing and selling even a small amount of stock there.

Tell me then, if I register for VAT in England, I HAVE to register in Ireland too, right? I can't just be registered in the UK, paying and reclaiming VAT on UK purchases and sales, while remaining non-registered in Ireland and staying VAT free in Ireland, yeah?

Lord TSC

Though even that says "outside the EU"....

topcat72

Looks as if ebay are doing the same as of this week..

** ***Changes to VAT on eBay fees for business sellers with a registered address in Ireland******

20 March, 2018 | 01:28PM GMT


Hello,

From 1 May 2018, sellers with a registered address in Ireland will contract with eBay GmbH instead of eBay Europe S.à r.l.

We’re not changing our net fees, or the services we provide, and sellers won’t need to update any of their listings. This change will appear on invoices starting from May 2018.

Business sellers registered for VAT will continue to receive VAT-free invoices.

Business sellers not registered for VAT will be charged 23% Irish VAT going forward. If you are registered for VAT and have not yet communicated your VAT number to us, we kindly ask you to do so (please go to Home > My eBay > Account > Site Preferences > Business Seller Preferences > VAT Status)

We’d recommend all business sellers consult their tax advisers to find out how VAT applies to their eBay businesses.

This change affects a number of our agreements, including our User Agreement , User Privacy Notice , and Billing Agreements.

We currently already charge 23% Irish VAT on seller fees for non-business sellers. There will be no changes in their fees.

Regards
The eBay Team