Selling on Amazon

[Stereo Steve]

You mean, when you account for VAT? On the advice of our accountants, we account for it when the sale is made and we treat the Amazon account as a bank account of ours, regardless of when funds are transfered to our current account.

I think it's open to interpretation but as far as I can see, this means we are liable for VAT at the point of sale and I'm happy with that. I can only see downside from taking any other approach.

Or did you mean something else? Age and alcohol are not good for the memory.

[kathynewman]

Thanks Steve - well that is good to know because that is exactly what we do.

Was thinking more along the lines of the VAT on the Amazon Fees tbh though - how do you deal with those?

(with you on the age thing btw!!)

[Stereo Steve]

Amazon fees are exempt aren't they? We get a monthly invoice and there's no VAT on there. It's removed at source. I can't remember if we had to register as we did with ebay.

[Rich Brady]

Thanks again for all the feedback I'll get the client to take a look at the thread.

Ben thanks for the offer of chatting with your wife. I may still take you up on that.

Rich

[acompton]

Amazon fees are exempt aren't they? We get a monthly invoice and there's no VAT on there. It's removed at source. I can't remember if we had to register as we did with ebay.

I've always understood this to be true, but I get a twinge when I see that phrase in the Amazon Fees invoice about the seller must account for VAT.

As I see it, you have to account for VAT on the sale (effectively to the end customer) and there is no VAT no claim back on the Amazon fee as its a B2B transaction between different EC countries. I did run this by the accountant back at the beginning and they agreed with this interpretation.

[Mike Hughes]

I've always understood this to be true, but I get a twinge when I see that phrase in the Amazon Fees invoice about the seller must account for VAT.

As I see it, you have to account for VAT on the sale (effectively to the end customer) and there is no VAT no claim back on the Amazon fee as its a B2B transaction between different EC countries. I did run this by the accountant back at the beginning and they agreed with this interpretation.
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Alan

When you buy goods and services from another EU country then you have to account for the VAT in the UK at the UK rate. i.e. if Amazon invoices you from another EU country then you have to pay the current UK VAT rate of 15% to HMRC.

This should all be worked out on your VAT return when you enter the totals into the section for goods and services purchased from within the EU.

Mike

[acompton]

When you buy goods and services from another EU country then you have to account for the VAT in the UK at the UK rate. i.e. if Amazon invoices you from another EU country then you have to pay the current UK VAT rate of 15% to HMRC.

This should all be worked out on your VAT return when you enter the totals into the section for goods and services purchased from within the EU.

Mike

Hmm... then I've been getting this wrong all along. I can see a visit to the accountant coming up. Truth to tell, I have a feeling the accountant isn't up to speed on this one.

[pnagames]

now i am confused a lot more

as i understand people account the vat on the amazon sales on a different way.

i dont understand why you have to calc the vat on your selling price. in effect amazon is your customer and not the third person customer.

[acompton]

..then you have to pay the current UK VAT rate of 15% to HMRC.

And having paid it, I can then claim it back as a VAT output?

[acompton]

now i am confused a lot more

as i understand people account the vat on the amazon sales on a different way.

i dont understand why you have to calc the vat on your selling price. in effect amazon is your customer and not the third person customer.

I thought this for a while, but the end customer is actually your customer for VAT purposes (delivery is to the UK). This is probably one of the most confusing areas of VAT, and I've never seen a clear, worked example.

[pnagames]

but it is not my end customer really is it?

its like someone comes to you shop from us buys a game but asks for a delivery in the uk

[Mike Hughes]

It's not that confusing unless you try and make it so. VAT is chargeable on goods and services at the purchase price.

The customer buys goods at the selling price. They have to pay VAT on that at the current rate of 15%. Not much room for confusion or doubt on that.

Amazon charge you a fee for managing the transaction. You have to pay VAT for that service. As you're invoiced from another EU country they don't charge you VAT but you have to account for it (i.e. pay it) at the UK rate to HMRC.

Amazon may deduct their fees before sending you the customer payment, but that has no effect on the tansactions that have actually taken place.

Mike

[Mark H]

We have discussed elsewhere who is the customer, and it is clear that the end purchaser is the seller's customer. Also, the seller is Amazon's customer, since Amazon have sold the seller some "marketing services".

Say the end purchaser spends £100. The purchaser is charged £13.04 VAT, and the seller pays this £13.04 VAT to HMRC (my understanding is that most sellers work out what VAT the customer would have been charged, £13.04 in this case, and pay this to HMRC). Thus the seller is due £100, £13.04 of which is VAT payable to HMRC in the usual way.

However, as part of the process, Amazon have charged the seller for "marketing services". This charge is 15% of the purchase price, which they deduct from the money the seller gets. They don't charge VAT because the seller will have given them their VAT number on registration. The Amazon charge has to be accounted for in your VAT return, in exactly the same way as you would if you had bought stock from the EU (having provided your VAT number to the supplier).

So the seller gets £85, £13.04 of which has to be paid to HMRC in the usual way. The seller has paid £15 to Amazon, and has to account for the VAT on this EU transaction where VAT hasn't been charged (Amazon charges are not quite this simple, but this will do for an example).

Mike - I know this is basically what you said, but I wanted to provide an example.

[pnagames]

We have discussed elsewhere who is the customer, and it is clear that the end purchaser is the seller's customer. Also, the seller is Amazon's customer, since Amazon have sold the seller some "marketing services".

Say the end purchaser spends £100. The purchaser is charged £15 VAT, and the seller pays this £15 VAT to HMRC (my understanding is that most sellers work out what VAT the customer would have been charged, £15 in this case, and pay this to HMRC). Thus the seller is due £100, £15 of which is VAT payable to HMRC in the usual way.

However, as part of the process, Amazon have charged the seller for "marketing services". This charge is 15% of the purchase price, which they deduct from the money the seller gets. They don't charge VAT because the seller will have given them their VAT number on registration. The Amazon charge has to be accounted for in your VAT return, in exactly the same way as you would if you had bought stock from the EU (having provided your VAT number to the supplier).

So the seller gets £85, £15 of which has to be paid to HMRC in the usual way. The seller has paid £15 to Amazon, and has to account for the VAT on this EU transaction where VAT hasn't been charged (Amazon charges are not quite this simple, but this will do for an example).

Mike - I know this is basically what you said, but I wanted to provide an example.

i can understand what are you saying on the first part. still not convinced 100% but i think i will send this to my accountant to get his opinion.

2nd part (amazon fees). what do you mean? do you mean that you need to add these fees in the "purchased goods from EU" box? if so, then yes based on the way you work the vat and the fees, amazon fees will be another expense of the business and they need to be added to the purchases box.

[acompton]

Mike/Mark,

Thanks for the input.

2nd part (amazon fees). what do you mean? do you mean that you need to add these fees in the "purchased goods from EU" box? if so, then yes based on the way you work the vat and the fees, amazon fees will be another expense of the business and they need to be added to the purchases box.

I'm with Panagiotis on this one. I'm paying VAT correctly on the sale, but not accounting for the Amazon invoice on the VAT return. And also, how do I put the Amazon fees invoice into my accounts - it never gets 'paid'.