FBA VAT on shipping


#1

We are selling through Merchant & FBA & have recently registered for VAT.
It would seen that when Amazon charge VAT on shipping to a customer via FBA they show the charge & VAT seperate (no problem with that) but the charge back they make to us is for the nett price of the shipping leaving us to presumably pay over the VAT element to HMRC. Seems weird.
It seems that generally the accounting for vat on Amazon is not straight forward.
Is there a way of getting end of month reports that show total sales value & vat on sales, and for fees total & fees vat.
Any help appreciated.


#2

Think of the process as follows. Makes it a lot more straightforward:

  • Customer orders item and shipping from YOU, including VAT
  • YOU order shipping services from Amazon, in addition to their other services
    ^(there is NO business relationship between customer and Amazon)^
  • Amazon charges YOU for their shipping services (ex. VAT, due to +reverse charge+ principle)
  • Purely incidential, the Amazon charge amounts to the same as the customer’s charge
    Amazon want to stay out of liabilities and tax obligations as much as they can. YOU must report all VAT collected from the customer, including the VAT on shipping charges.

#3

Here is a sample

Product charges
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Qty: 1 £6.08

Other
Product Tax: £1.22
Shipping tax: £0.66
Shipping: £3.33
Buyer Pays £11.29

Amazon fees
Commission: -£0.88
FBA fulfilment fee per unit: -£1.34
Shipping chargeback: -£3.33
Change to your seller account balance £5.74

Item ordered through FBA and carriage is to be paid by buyer. Amazons charges for the carriage is £3.33 + VAT. Amazon keep the £3.33 by way of chargeback, but leave us to hand over the VAT content to HMRC. I know in financial terms we are no worse off but it seems strange that we must account for VAT on money we haven’t received.


#4

> Amazons charges for the carriage is £3.33 + VAT.
NO , this is the key mis-perception.
YOU charge £3.33 + VAT to the buyer. It’s written on YOUR invoice. YOU collect VAT from the buyer.
> Amazon keep the £3.33 by way of chargeback, but leave us to hand over the VAT content to HMRC.
YOU order a shipping service from Amazon to fulfill the order. The customer has nothing to do with it.
Incidentially, Amazon charge you the very same amount and the net effect is always zero.


VAT is paid by the consumer, you are just the (unpaid) tax collector. You have collected VAT for the shipping charge (check your invoice :-)) and you have to hand it over to HMRC.

Amazon provide shipping services to you. They may charge you a service fee. Business transactions between you and Amazon are VAT-exempt due to the +reverse charge+ rules.

That’s all.


#5

If you sell zero rated items such as books you do not ‘charge’ buyers, but Amazon charges you for their services to you. If you are VAT registered they don’t.


closed #6