Any using flat rate vat scheme?
Hello,
We are getting the turnover that will require us to be vat registered. I was thinking of using the flat rate scheme which i believe its 7.5% of sale price of an item but we would get a 1% discount for the first year, so it would 6.5% for the first 12 months. How does it affect the vat on Amazon fees once a person puts their vat number in to the Amazon system? Would it be suitable to be on the flat rate scheme and input vat number into Amazon system? Anybody selling on Amazon using flat rate scheme who has experience of this?
Thanks,
Catherine
Seller_oPEw9rj5vWsYf
On the flat rate scheme Amazon fees are zero rated. ( they still have to be accounted for on vat return using reverse charge)
It’s a strange quirk of the scheme that goods from other EU countries can’t be zero rated but services can
Seller_Rkf2znCXtSZpI
Your post intrigued me so I did some calculations
| Normal VAT 20% | Flat Rate VAT 6.5% | |
|---|---|---|
| sales price | 9 | 9 |
| Sale price less VAT | 7.50 | 8.415 |
| Product + delivery | -3.33 | -4 |
| amazon fee | -1.35 | -1.62 |
| Profit | 2.82 | 2.795 |
| Margin | 31% | 31% |
I would need to mark up by over 125% (on product + Delivery cost) for it to be financially beneficial to be on Flat rate. It couldn’t get near this. Unless you are getting a big mark up you may be better off on normal VAT.
Seller_I21w4Il6o6ndm
flat rate percentage depends on your business category - what one are you basing the 7.5% figure on?
Seller_L3E8iknKXqZNV
For flat rate - does turnover include any sales that are subsequently refunded?
I would guess that it does.
Seller_c2wg3bzwmXhaa
The flat rate scheme is best used if you are over the threshold and selling predominantly second hand goods as you can’t reclaim any VAT on stock purchased.
Seller_bdSdLjti4IugQ
Yes we use the flat rate and it’s excellent and very easy to do. We use XERO for our accounting software and a2x for our Amazon sales information. Xero see’s we’re on the flat rate, which for us is 7.5%, so if for example we’ve done £5,000 in VAT from our sales it pays what would be the total at the 7.5% rate and the rest is retained back to us and recorded by XERO in a flat rate adjustment account… very simple and great for small businesses. You have to be turning over under £150,000 to opt in BUT you don’t need to opt out until your business takes over £230,000 (that includes VAT) over a 12 month rolling period.
Seller_oPEw9rj5vWsYf
My understanding on the flat rate scheme is that sales to other EU business are included in turnover figure.
For that reason I wouldn’t join Amazon’s vat calculation service if you sell a lot to EU businesse’s. Amazon will automatically zero rate the sale but you will still owe vat on them
Seller_IZMia0ASJ6cAm
Thanks for the reply’s, really interesting stuff on here. I’m on holiday just now and will have a good look through all the info when I’m back.
Thanks
Seller_IZMia0ASJ6cAm
Hello,
Thanks for all the advice. I have done some calculations and looks like we are better being standard rate VAT rather than using the flat rate scheme. Our mark up price is not enough to make the flat rate more profitable. We pay VAT on all our goods and storage ect.
Thanks
Seller_DkWvTBsSZdjtl
Hi
I m seller from Belgium in all europe
Chinese seller use Flat rate scheme now and don’t have pay the full VAT (about 20%)
Could somebody explain me how they do that it is totally unfair for europe business
am i right ?
If i read well some people think flat rate scheme don’t help but i m sure they use that method so if some of you guys have some idea
